Sandhill Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows: Direct labour Manufacturing overhead $1,808,000 904,000 As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $111,400, and 1819C, with total direct labour charges of $391,000. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued for 1768B amounted to $230,000, and for 1819C they amounted to $420,100. Total charges to the Manufacturing Overhead Control account for the year were $898,000, and direct labour charges made to all jobs amounted to $1,583,400, representing 247,900 direct labour hours. There were no beginning inventories. In addition to the ending work in process just described, the ending finished goods inventory account showed a balance of $561,480. Sales for the year amounted to $6,210,300; cost of goods sold totalled $3,649,620; and sales, general, and administrative expenses were $1,855,500. The above amounts for inventories and the cost of goods sold have not been adjusted for any over-or under-application of manufacturing overhead to production. It is the company's practice to allocate any over-or under-applied overhead to inventories and the cost of goods sold.
Sandhill Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows: Direct labour Manufacturing overhead $1,808,000 904,000 As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $111,400, and 1819C, with total direct labour charges of $391,000. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued for 1768B amounted to $230,000, and for 1819C they amounted to $420,100. Total charges to the Manufacturing Overhead Control account for the year were $898,000, and direct labour charges made to all jobs amounted to $1,583,400, representing 247,900 direct labour hours. There were no beginning inventories. In addition to the ending work in process just described, the ending finished goods inventory account showed a balance of $561,480. Sales for the year amounted to $6,210,300; cost of goods sold totalled $3,649,620; and sales, general, and administrative expenses were $1,855,500. The above amounts for inventories and the cost of goods sold have not been adjusted for any over-or under-application of manufacturing overhead to production. It is the company's practice to allocate any over-or under-applied overhead to inventories and the cost of goods sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Aa 04.
Transcribed Image Text:Sandhill Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies
manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by
forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows:
Direct labour
Manufacturing overhead
$1,808,000
904,000
As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $111,400, and 1819C, with
total direct labour charges of $391,000. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued
for 1768B amounted to $230,000, and for 1819C they amounted to $420,100.
Total charges to the Manufacturing Overhead Control account for the year were $898,000, and direct labour charges made to all jobs
amounted to $1,583,400, representing 247,900 direct labour hours.
There were no beginning inventories. In addition to the ending work in process just described, the ending finished goods inventory
account showed a balance of $561,480.
Sales for the year amounted to $6,210,300; cost of goods sold totalled $3,649,620; and sales, general, and administrative expenses
were $1,855,500.
The above amounts for inventories and the cost of goods sold have not been adjusted for any over-or under-application of
manufacturing overhead to production. It is the company's practice to allocate any over-or under-applied overhead to inventories and
the cost of goods sold.
Transcribed Image Text:Prorate the amount calculated in part (a) based on the ending balances (before prorating) of Work in Process, Finished Goods, and
Cost of Goods Sold. (Round allocation percentage to 2 decimal places, e.g. 15.25% and final answers to the nearest whole
dollar, e.g. 5,275.)
Cost of goods sold
Finished goods inventory
WIP inventory
Total
$
Allocation
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