- Taveras Corporation currently operates at 50% of its available manufacturing capacity. It uses job-order costing with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
| Machine-hours required to support estimated production | 180,000 |
| Fixed manufacturing overhead cost | $ 2,520,000 |
| Variable manufacturing overhead cost per machine-hour | $ 2.00 |
Required:
- Compute the plantwide predetermined overhead rate.
- During the year, Job P90 was started, completed, and sold to the customer for $2,800. The following information pertains to this job:
| Direct materials | $ 1,288 |
| Direct labor cost | $ 924 |
| Machine-hours used | 75 |
Compute the total manufacturing cost assigned to Job P90.
- Tech Solutions is a consulting firm that uses job-order costing. Its direct materials consist of hardware and software it purchases and installs on behalf of its clients. The firm’s direct labor includes salaries of consultants who work at the client’s job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office supplies consumed serving clients.
Tech Solutions computes its predetermined overhead rate annually based on direct labor-hours. At the beginning of the year, it estimated 100,000 direct labor-hours would be required for the period’s estimated level of client service. The company also estimated $1,400,000 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm’s actual overhead cost for the year was $1,418,700 and its actual total direct labor was 104,000 hours.
Required:
- Compute the predetermined overhead rate.
- During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available for this job:
| Direct materials | $ 41,250 |
| Direct labor cost | $ 27,800 |
| Direct labor-hours worked | 400 |
- Compute the total job cost for Xavier Company.
Osborn Manufacturing uses a predetermined overhead rate of $20.00 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $276,000 of total manufacturing overhead for an estimated activity level of 13,800 direct labor-hours.
The company actually incurred $275,000 of manufacturing overhead and 13,300 direct labor-hours during the period.
Required:
- Calculate the underapplied or overapplied manufacturing overhead.
- Assume the company’s underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the closing journal entry increase or decrease gross margin? By how much?
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
| Machine-hours required to support estimated production | 152,000 |
| Fixed manufacturing overhead cost | $ 654,000 |
| Variable manufacturing overhead cost per machine-hour | $ 4.30 |
Required:
- Compute the plantwide predetermined overhead rate.
- During the year, Job 400 was started and completed. The following information pertains to this job:
| Direct materials | $ 320 |
| Direct labor cost | $ 300 |
| Machine-hours used | 36 |
- Compute the total manufacturing cost assigned to Job 400.
- If Job 400 includes 50 units, what is its unit product cost?
- If Moody uses a markup percentage of 130% of its total manufacturing cost, then what selling price per unit would it establish for Job 400?
Mason Company provided the following data for this year:
| Sales | $ 654,000 |
| Direct labor cost | $ 85,000 |
| Raw material purchases | $ 140,000 |
| Selling expenses | $ 108,000 |
| Administrative expenses | $ 43,000 |
| Manufacturing overhead applied to work in process | $ 224,000 |
| Actual manufacturing overhead costs | $ 204,000 |
| Inventories | Beginning | Ending |
| Raw materials | $ 8,300 | $ 10,200 |
| Work in process | $ 5,200 | $ 20,700 |
| Finished goods | $ 71,000 | $ 25,300 |
Required:
- Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.
- Prepare a schedule of cost of goods sold. Assume the company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.
- Prepare an income statement.