Job Order Hanson uses a job order cost system with machine hours as the cost dri
ID: 2331728 • Letter: J
Question
Job Order Hanson uses a job order cost system with machine hours as the cost driver for overhead. Below is the needed information to determine the following: 1 The overhead rate 2 The cost of each jolb 3 The balance in WIP, Finished Goods and cost of goods sold. Estimated overhead for 2017 Estimated machine hours for Jobs on 1-1-2017 $900,000 36,000 2017 Job 245 is in Work in Process Job 229 is in Finished Goods Costs incurred in 2016 Costs incurred in 2016 $11,900 $23,800 Costs and other information for this year 256 0 8,000 12,000 0 6,0009,000 300 245 258 8,2003,500 7,7004,200 120 Jobs 229 257 Materials Labor Machine Hours 0 140 240 Status soldfinished finished finished not sold sold finishedExplanation / Answer
Requirement 1
Overhead Rate calculation
(A)
Total Estimated Overheads
$ 900,000.00
(B)
Estimated machine hours
36000
(A/B)
Overhead rate
$ 25.00 per Machine hour
Requirement 2
Overhead cost Allocated
Job 229
Job 245
Job 256
Job 257
Job 258
(A)
Machine Hours
0
140
300
240
120
(B)
Overhead rate Per machine hour
$ 25.00
$ 25.00
$ 25.00
$ 25.00
$ 25.00
(A*B)
Overhead cost allocated
$ -
$ 3,500.00
$ 7,500.00
$ 6,000.00
$ 3,000.00
Calculation of Total cost for each job
Job 229
Job 245
Job 256
Job 257
Job 258
Opening WIP
$ 11,900.00
Current Cost
Materials
$ -
$ 8,000.00
$ 12,000.00
$ 8,200.00
$ 3,500.00
Labor
$ -
$ 6,000.00
$ 9,000.00
$ 7,700.00
$ 4,200.00
Overheads
$ -
$ 3,500.00
$ 7,500.00
$ 6,000.00
$ 3,000.00
Total Cost
$ 23,800.00**
$ 29,400.00*
$ 28,500.00
$ 21,900.00
$ 10,700.00
*Total cost includes cost incurred in year 2016.
** Jon 229 is already completed in year 2016. It’s total cost is 23800.
Requirement 3
Calculation of WIP
Jobs
Job 258
Total Cost till 2017
$ 10,700.00
Total WIP
$ 10,700.00
Calculation of Finished goods
Jobs
Job 256
Total Cost till 2017
$ 28,500.00
Total Finished goods
$ 28,500.00
Calculation of Cost of Goods Sold
Jobs
Job 229
Job 245
Job 257
Total Cost
$ 23,800.00
$ 29,400.00
$ 21,900.00
Total Cost of Goods Sold ($ 23800+$ 29400+$ 21900)
$ 75,100.00
(A)
Total Estimated Overheads
$ 900,000.00
(B)
Estimated machine hours
36000
(A/B)
Overhead rate
$ 25.00 per Machine hour
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