ABC produces custom made evening wear. ABC uses a job-order costing system and allocates manufacturing overhead on the basis of direct labor hours. It estimates the number of direct labour hours to be 10,000 ,the manufacturing overhead to be $150,000 and the estimated machine hours used to be 5,000. The actual manufacturing costs for the period were $175,000 and the actual direct labor hours were 9,000 hours. The first job of the year is for one tuxedo which has accumulated $1,000 in direct materials and 50 hours of direct labour at a wage rate $50 per hour. The second job of the year is for one wedding dress which has accumulated $5,000 in direct materials and 250 hours of direct labour at a wage rate of $65 per hour. Required: NOTE: You must show all your calculations. If you show the answer only and if it is correct you will not receive any marks. 1. Compute the predetermined overhead rate that will be used during the period to apply manufacturing overhead to jobs. 2. Compute the manufacturing cost of the tuxedo. 3. Compute the manufacturing cost of the wedding dress. 4. Compute the total amount of overhead applied to all jobs during the year. 5. Compute the amount of over or under applied manufacturing overhead during the year. Specify if it is over or under applied. 6. Prepare the journal entry to adiust for the over/ under annlied manufacturing ovorhoad
ABC produces custom made evening wear. ABC uses a job-order costing system and allocates manufacturing overhead on the basis of direct labor hours. It estimates the number of direct labour hours to be 10,000 ,the manufacturing overhead to be $150,000 and the estimated machine hours used to be 5,000. The actual manufacturing costs for the period were $175,000 and the actual direct labor hours were 9,000 hours. The first job of the year is for one tuxedo which has accumulated $1,000 in direct materials and 50 hours of direct labour at a wage rate $50 per hour. The second job of the year is for one wedding dress which has accumulated $5,000 in direct materials and 250 hours of direct labour at a wage rate of $65 per hour. Required: NOTE: You must show all your calculations. If you show the answer only and if it is correct you will not receive any marks. 1. Compute the predetermined overhead rate that will be used during the period to apply manufacturing overhead to jobs. 2. Compute the manufacturing cost of the tuxedo. 3. Compute the manufacturing cost of the wedding dress. 4. Compute the total amount of overhead applied to all jobs during the year. 5. Compute the amount of over or under applied manufacturing overhead during the year. Specify if it is over or under applied. 6. Prepare the journal entry to adiust for the over/ under annlied manufacturing ovorhoad
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Answer question 4, 5 and 6.
Transcribed Image Text:ABC produces custom made evening wear. ABC uses a job-order costing system and
allocates manufacturing overhead on the basis of direct labor hours. It estimates the
number of direct labour hours to be 10,000 ,the manufacturing overhead to be $150,000
and the estimated machine hours used to be 5,000. The actual manufacturing costs for the
period were $175,000 and the actual direct labor hours were 9,000 hours.
The first job of the year is for one tuxedo which has accumulated $1,000 in direct materials
and 50 hours of direct labour at a wage rate $50 per hour.
The second job of the year is for one wedding dress which has accumulated $5,000 in
direct materials and 250 hours of direct labour at a wage rate of $65 per hour.
Required:
NOTE: You must show all your calculations. If you show the answer only and if it is
correct you will not receive any marks.
1. Compute the predetermined overhead rate that will be used during the period to apply
manufacturing overhead to jobs.
2. Compute the manufacturing cost of the tuxedo.
3. Compute the manufacturing cost of the wedding dress.
4. Compute the total amount of overhead applied to all jobs during the year.
5. Compute the amount of over or under applied manufacturing overhead during the
year. Specify if it is over or under applied.
6. Prepare the journal entry to adjust for the over/ under applied manufacturing overhead.
Expert Solution
Step 1 Introduction
The overhead is said to be overapplied when applied overhead cost is more than the actual overhead cost.
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