Ivana Company employs normal costing for its production. The following data are providedduring the current year:Net purchases of raw materials during the yearTotal labor costs during the yearDepreciation of factory assets during the yearUtilities on the factory during the yearRaw materials inventoryWork in process inventoryFinished goods inventoryBeginning200,000500,000600,000500,000800,000100,000300,000•The entity uses a single account for its direct material and indirect materials. Indirectmaterial•used is one-fourth of the total material used.The indirect labor cost is 1/8 of the total labor costs.1. What is the over or under application of overhead?The overhead application rate is 80% of direct labor costs.Any over or under application of overhead is considered material.Ending300,000200,000300,000VVV Co. manufactures electric motor drills. During July 2020, Job 007 for the production of600 motor drills was completed at the following costs:Direct MaterialsDirect LaborApplied Factory Overhead (P60,000 allowance included)Direct materialsDirect labor2,100,0001,200,000510,000Final inspection of Job 007 disclosed 15 defective units and 45 spoiled units.The defective drills were reworked with the following costs:P 6,500P20,000?OverheadAnd the spoiled drills were can be sold for P152,000.2. If the Rework cost and Spoilage is attributable to internal failure and charged to allproduction, what is the total cost transferred to Finished Goods Inventory of Job 007?3. If the Rework cost and Spoilage is attributable to exacting specifications and charged tospecific job. what is the unit cost of Job 007?

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• The entity uses a single account for its direct material and indirect materials. Indirect material • used is one-fourth of the total material used. • The indirect labor cost is 1/8 of the total labor costs. • The overhead application rate is 80% of direct labor costs. Any over or under application of overhead is considered material. 1. What is the over or under application of overhead?

• The entity uses a single account for its direct material and indirect materials. Indirect material • used is one-fourth of the total material used. • The indirect labor cost is 1/8 of the total labor costs. • The overhead application rate is 80% of direct labor costs. Any over or under application of overhead is considered material. 1. What is the over or under application of overhead?

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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