At the beginning of the year, Learer Company's manager estimated total direct labor cost to be $2,518,000. The manager also estimated the following overhead costs for the year. Indirect labor Rent on factory building Factory utilities Depreciation-Factory equipment Repairs expense-Factory equipment Indirect materials Total estimated overhead costs $ 561,000 141,800 157,800 481,800 61,800 106,600 $ 1,510,800 For the year, the company incurred $1,525,400 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $605,800; Job 202, $564,800; Job 203, $299,800; Job 204, $717,800; and Job 205, $315,800. In addition, Job 206 is in process at the end of the year and had been charged $18,800 for direct labor. No jobs were in process at the beginning of the year. The company's predetermined overhead rate is based on a percent of direct labor cost. Required: 1-a. Determine the predetermined overhead rate for the year. 1-b. Determine the overhead applied to each of the six jobs during the year. 1-c. Determine the over- or underapplied overhead at the year-end. 2. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold at year-end.

At the beginning of the year, Learer Company's manager estimated total direct labor cost to be $2,518,000. The manager also estimated the following overhead costs for the year. Indirect labor Rent on factory building Factory utilities Depreciation-Factory equipment Repairs expense-Factory equipment Indirect materials Total estimated overhead costs $ 561,000 141,800 157,800 481,800 61,800 106,600 $ 1,510,800 For the year, the company incurred $1,525,400 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $605,800; Job 202, $564,800; Job 203, $299,800; Job 204, $717,800; and Job 205, $315,800. In addition, Job 206 is in process at the end of the year and had been charged $18,800 for direct labor. No jobs were in process at the beginning of the year. The company's predetermined overhead rate is based on a percent of direct labor cost. Required: 1-a. Determine the predetermined overhead rate for the year. 1-b. Determine the overhead applied to each of the six jobs during the year. 1-c. Determine the over- or underapplied overhead at the year-end. 2. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold at year-end.

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Description: At the beginning of the year, Learer Company's manager estimated total direct labor cost to be $2,518,000. The manager alsoestimated the following overhead costs for the year.Indirect laborRent on factory buildingFactory utilitiesDepreciation-Factor

Cornerstones of Cost Management (Cornerstones Series)

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Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...

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Concept explainers

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.

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Question

At the beginning of the year, Learer Company's manager estimated total direct labor cost to be $2,518,000. The manager also
estimated the following overhead costs for the year.
Indirect labor
Rent on factory building
Factory utilities
Depreciation-Factory equipment
Repairs expense-Factory equipment
Indirect materials.
Total estimated overhead costs
$ 561,000
141,800
157,800
481,800
61,800
106,600
$ 1,510,800
For the year, the company incurred $1,525,400 of actual overhead costs. It completed and sold five jobs with the following direct labor
costs: Job 201, $605,800; Job 202, $564,800; Job 203, $299,800; Job 204, $717,800; and Job 205, $315,800. In addition, Job 206 is
in process at the end of the year and had been charged $18,800 for direct labor. No jobs were in process at the beginning of the year.
The company's predetermined overhead rate is based on a percent of direct labor cost.
Required:
1-a. Determine the predetermined overhead rate for the year.
1-b. Determine the overhead applied to each of the six jobs during the year.
1-c. Determine the over- or underapplied overhead at the year-end.
2. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold at year-end.

Req 1A
Job Number
Req 1B
201
202
203
204
205
206
Total
Req 1C
Determine the overhead applied to each of the six jobs during the year.
Overhead applied
Req 2
Direct Labor
$
605,800
564,800
299,800
717,800
315,800
18,800
$ 2,522,800 $
0

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