The predetermined overhead rate for 2024 is based on the company’s estimated total manufacturing overhead during all of 2024 which is $1,265,125 and the estimated total direct labor hours of 34,900. The owner of the company does not have an accounting background and doesn’t understand how the balances of the inventory accounts are calculated nor how gross profit is calculated. The owner asked you to prepare a single spreadsheet providing the inventory balances and gross profit for January 2024. Your Excel Spreadsheet must include formulas, formatted cells and at least once text box. Tasks: 1. Correctly calculate predetermined overhead rate to be used in January 2024. 2. Correctly calculate the balances of the inventory accounts at January 31, 2024 indicating which jobs are included in the balance as applicable. 3. Correctly calculate gross profit for January 2024 indicating which jobs are included as applicable.
The predetermined overhead rate for 2024 is based on the company’s estimated total manufacturing overhead during all of 2024 which is $1,265,125 and the estimated total direct labor hours of 34,900. The owner of the company does not have an accounting background and doesn’t understand how the balances of the inventory accounts are calculated nor how gross profit is calculated. The owner asked you to prepare a single spreadsheet providing the inventory balances and gross profit for January 2024. Your Excel Spreadsheet must include formulas, formatted cells and at least once text box. Tasks: 1. Correctly calculate predetermined overhead rate to be used in January 2024. 2. Correctly calculate the balances of the inventory accounts at January 31, 2024 indicating which jobs are included in the balance as applicable. 3. Correctly calculate gross profit for January 2024 indicating which jobs are included as applicable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You are the Accountant for a Custom Furniture company. The company uses a job order costing system
and appliesoverhead on the basis of direct labor hours. The January 1, 2024 raw materials inventory
balance was $19,000. Actual overhead for January was $106,500 and Direct Labor Hours for January
totaled 2,975. The January 31, 2024 raw materials inventory balance was $27,000. During January
2024, Jobs No. 21 & 22 were completed. A single Job, No. 22, was sold for $110,000 during January
2024. January 31, 2024 costing information for jobs 20, 21, 22 and 23 are below.
Job No. Direct Materials Direct Labor Direct Labor Hours
20 7,500$ 18,600$ 1,200
21 4,000$ 12,788$ 825
22 7,000$ 13,563$ 875
23 3,000$ 3,100$ 200
The predetermined overhead rate for 2024 is based on the company’s estimated total manufacturing
overhead during all of 2024 which is $1,265,125 and the estimated total direct labor hours of 34,900.
The owner of the company does not have an accounting background and doesn’t understand how the
balances of the inventory accounts are calculated nor how gross profit is calculated. The owner asked
you to prepare a single spreadsheet providing the inventory balances and gross profit for January 2024.
Your Excel Spreadsheet must include formulas, formatted cells and at least once text box.
Tasks:
1. Correctly calculate predetermined overhead rate to be used in January 2024.
2. Correctly calculate the balances of the inventory accounts at January 31, 2024 indicating which
jobs are included in the balance as applicable.
3. Correctly calculate gross profit for January 2024 indicating which jobs are included as applicable.
and applies
balance was $19,000. Actual overhead for January was $106,500 and Direct Labor Hours for January
totaled 2,975. The January 31, 2024 raw materials inventory balance was $27,000. During January
2024, Jobs No. 21 & 22 were completed. A single Job, No. 22, was sold for $110,000 during January
2024. January 31, 2024 costing information for jobs 20, 21, 22 and 23 are below.
Job No. Direct Materials Direct Labor Direct Labor Hours
20 7,500$ 18,600$ 1,200
21 4,000$ 12,788$ 825
22 7,000$ 13,563$ 875
23 3,000$ 3,100$ 200
The predetermined overhead rate for 2024 is based on the company’s estimated total manufacturing
overhead during all of 2024 which is $1,265,125 and the estimated total direct labor hours of 34,900.
The owner of the company does not have an accounting background and doesn’t understand how the
balances of the inventory accounts are calculated nor how gross profit is calculated. The owner asked
you to prepare a single spreadsheet providing the inventory balances and gross profit for January 2024.
Your Excel Spreadsheet must include formulas, formatted cells and at least once text box.
Tasks:
1. Correctly calculate predetermined overhead rate to be used in January 2024.
2. Correctly calculate the balances of the inventory accounts at January 31, 2024 indicating which
jobs are included in the balance as applicable.
3. Correctly calculate gross profit for January 2024 indicating which jobs are included as applicable.
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