Johnson Inc. is a job-order manufacturing company that uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours are 93,000 and estimated factory overhead is $511,500. The following information is for September of the current year. Job A was completed during September, and Job B was started but not finished. September 1, inventories Materials inventory $ 8,400 Work-in-process inventory (All Job A) 33,000 Finished goods inventory 71,500 Material purchases 117,500 Direct materials requisitioned Job A 74,000 Job B 38,000 Direct labor hours Job A 5,100 Job B 4,400 Labor costs incurred Direct labor ($7.50/hour) 71,250 Indirect labor 14,400 Supervisory salaries 6,900 Rental costs Factory 7,900 Administrative offices 2,700 Total equipment depreciation costs Factory 8,850 Administrative offices 2,950 Indirect materials used 12,900 Required: 1. What is the total cost of Job A? 2. What is the total factory overhead applied during September? 3. What is the overapplied or underapplied overhead for September?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Johnson Inc. is a job-order manufacturing company that uses a predetermined
| September 1, inventories | |||
| Materials inventory | $ | 8,400 | |
| Work-in-process inventory (All Job A) | 33,000 | ||
| Finished goods inventory | 71,500 | ||
| Material purchases | 117,500 | ||
| Direct materials requisitioned | |||
| Job A | 74,000 | ||
| Job B | 38,000 | ||
| Direct labor hours | |||
| Job A | 5,100 | ||
| Job B | 4,400 | ||
| Labor costs incurred | |||
| Direct labor ($7.50/hour) | 71,250 | ||
| Indirect labor | 14,400 | ||
| Supervisory salaries | 6,900 | ||
| Rental costs | |||
| Factory | 7,900 | ||
| Administrative offices | 2,700 | ||
| Total equipment depreciation costs | |||
| Factory | 8,850 | ||
| Administrative offices | 2,950 | ||
| Indirect materials used | 12,900 | ||
Required:
1. What is the total cost of Job A?
2. What is the total factory overhead applied during September?
3. What is the overapplied or underapplied overhead for September?
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