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costs were incurred durin erial (all direct) ead costs:

costs were incurred durin erial (all direct) ead costs:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. ABC Co. uses a job-order cost system and applies overhead cost to jobs on the basis of direct materials used in production. The company's estimates were: manufacturing overhead cost, $400,000; and direct materials to be used in production, $250,000. The company’s inventory accounts at the beginning of the year were: Beginning $ 10,000 75,000 130,000 Ending $ 40,000 35,000 200,000 Raw Materials Work in Process Finished Goods The following actual costs were incurred during the year: Purchase of raw material (all direct) Direct labor cost $ 255,000 45,000 Manufacturing overhead costs: Indirect labor 85,000 90,000 130,000 45,000 7,000 24,000 Utilities Depreciation of equipment Maintenance Insurance Rent, building Required: 1. a) Compute the predetermined overhead rate for the year. b) Compute the amount of under- or overapplied overhead for the year. 2. Prepare a schedule of cost of goods manufactured for the year. 3. Compute the cost of goods sold for the year. 4. Job 2C7 was started and completed during the year. What price would have been charged to the customer if the job required $4,500 in direct materials and $1,500 in direct labor cost and the company priced its jobs at 25% above cost to manufacture. 5. Direct materials made up $12,000 of the $35,000 ending Work in Process inventory balance. Supply the information missing below: Direct materials $ 12,000 Direct labor ? Manufacturing overhead Work in process inventory ? $ 35,000
Transcribed Image Text:1. ABC Co. uses a job-order cost system and applies overhead cost to jobs on the basis of direct materials used in production. The company's estimates were: manufacturing overhead cost, $400,000; and direct materials to be used in production, $250,000. The company’s inventory accounts at the beginning of the year were: Beginning $ 10,000 75,000 130,000 Ending $ 40,000 35,000 200,000 Raw Materials Work in Process Finished Goods The following actual costs were incurred during the year: Purchase of raw material (all direct) Direct labor cost $ 255,000 45,000 Manufacturing overhead costs: Indirect labor 85,000 90,000 130,000 45,000 7,000 24,000 Utilities Depreciation of equipment Maintenance Insurance Rent, building Required: 1. a) Compute the predetermined overhead rate for the year. b) Compute the amount of under- or overapplied overhead for the year. 2. Prepare a schedule of cost of goods manufactured for the year. 3. Compute the cost of goods sold for the year. 4. Job 2C7 was started and completed during the year. What price would have been charged to the customer if the job required $4,500 in direct materials and $1,500 in direct labor cost and the company priced its jobs at 25% above cost to manufacture. 5. Direct materials made up $12,000 of the $35,000 ending Work in Process inventory balance. Supply the information missing below: Direct materials $ 12,000 Direct labor ? Manufacturing overhead Work in process inventory ? $ 35,000
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