ABC Company uses a job-order costing system and applies manufacturing overhead based on machine hours. For 2020, ABC Co. estimated manufacturing overhead to be $150,000, and the estimated machine hours are 25,000. The following information is for the last month in 2020: 1111 Job 12 $3,000 Job 11 Job 13 Totals $15,000 2,450 $2,000 Work in process, beginning Direct materials $10,000 1,000 950 500 150 1,350 Direct labour costs Machine hours 900 300 250 150 50 450 Actual manufacturing overhead costs incurred in the month were $3,500. There was no beginning balance in the manufacturing overhead account at the start of the month. Questions a). Calculate the pre-determined overhead rate. b) Calculate the total cost for each job. If Job No. 11 was completed during the month, what is the balance of WIP at the end of the month? What is the balance of the manufacturing overhead account at the end of the month? Is manufacturing overhead over or underapplied? e). Prepare the journal entry to close underapplied or overapplied overhead to cost of goods sold.
ABC Company uses a job-order costing system and applies manufacturing overhead based on machine hours. For 2020, ABC Co. estimated manufacturing overhead to be $150,000, and the estimated machine hours are 25,000. The following information is for the last month in 2020: 1111 Job 12 $3,000 Job 11 Job 13 Totals $15,000 2,450 $2,000 Work in process, beginning Direct materials $10,000 1,000 950 500 150 1,350 Direct labour costs Machine hours 900 300 250 150 50 450 Actual manufacturing overhead costs incurred in the month were $3,500. There was no beginning balance in the manufacturing overhead account at the start of the month. Questions a). Calculate the pre-determined overhead rate. b) Calculate the total cost for each job. If Job No. 11 was completed during the month, what is the balance of WIP at the end of the month? What is the balance of the manufacturing overhead account at the end of the month? Is manufacturing overhead over or underapplied? e). Prepare the journal entry to close underapplied or overapplied overhead to cost of goods sold.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter3: Process Cost Systems
Section: Chapter Questions
Problem 4E: The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the...
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Variance Analysis
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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