3) Molin Corporation is a manufacturer that uses job-order costing. The company

Question

3) Molin Corporation is a manufacturer that uses job-order costing. The company closes out any has supplied the following data for the just completed year overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company Estimated total manufacturing overhead at the beginning of the year Estimated direct labor-hours at the beginning of the year $638,750 35,000 direct labor-hours Results of operations: Actual direct labor-hours Manufacturing overhead: 40,000 direct labor-hours Indirect labor cost $166,000 $595,000 $1,570,000 Other manufacturing overhead costs incurred Cost of goods sold (unadjusted) Required: a. What is the total amount of manufacturing overhead applied to production during the year? b. Is manufacturing overhead overapplied or underapplied for the year? By how much? c. What is the adjusted cost of goods sold for the year?

Explanation / Answer

a) Predetermine overhead rate = 638750/35000 = 18.25 per labour hour

Manufacturing overhead applied = 40000*18.25 = 730000

b) Actual overhead = 166000+595000 = 761000

Under applied overhead = 730000-761000 = 31000

c) Adjusted cost of goods sold = 1570000+31000 = 1601000

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