Juarez, Inc. uses a job-order costing system for its products, which pass from t
ID: 2342410 • Letter: J
Question
Juarez, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The company applies manufacturing overhead using machine hours in the Machining Department and direct-labor cost in the Assembly Department. The following information relates to the year just ended:
Selling and administrative expense amounted to $2,500,000.
1. Assuming the use of normal costing, determine the predetermined overhead rates used in the Machining Department and the Assembly Department.
2. Compute the cost of the company’s year-end work-in-process inventory.
3.Determine whether overhead was under- or overapplied during the year in the Machining Department.
4. Determine whether overhead was under- or overapplied during the year in the Assembly Department.
5. If Juarez disposes of under- or overapplied overhead as an adjustment to Cost of Goods Sold, would the company’s Cost of Goods Sold account increase or decrease?
6. How much overhead would have been charged to the company’s Work-in-Process account during the year?
7. Comment on the appropriateness of the company’s cost drivers (i.e., the use of machine hours in Machining and direct-labor cost in Assembly).
Juarez, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The company applies manufacturing overhead using machine hours in the Machining Department and direct-labor cost in the Assembly Department. The following information relates to the year just ended:
Explanation / Answer
1) Overhead rate :
Machining department = (4000000/400000) = 10 per Machine hour
Assembly department = 3080000/5600000 = 55% of direct labour cost
2) Compute the cost of the company’s year-end work-in-process inventory.
Year end work in process = 97785+54700 = $152485
3.Determine whether overhead was under- or overapplied during the year in the Machining Department.
Applied overhead = 425000*10 = 4250000
Actual overhead = 4280000
Under applied overhead = 4250000-4280000 = 30000
4. Determine whether overhead was under- or overapplied during the year in the Assembly Department.
Applied overhead = 5780000*55% = 3179000
Actual overhead = 3040000
Over applied overhead = 3179000-3040000 = 139000
Note : Please post rest part as a individually question because as per chegg policy only 4 part can be answered
Machining department Assembly department Direct material 23500 6800 Direct labour 27700 58700 Overhead applied 350*10 = 3500 58700*55% = 32285 Total 54700 97785Related Questions
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