work in 1/3 Baab Corporation is a manufacturing firm that uses job-order costing
ID: 2394678 • Letter: W
Question
work in 1/3 Baab Corporation is a manufacturing firm that uses job-order costing The company's inventory balances were as follows at the beginning and end of the year Balance Balance 14,200 $22,200 27,200 $9,200 62,200 $77,200 aw satezials The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,200 machine-hours and incur $245,680 in manufacturing overhead cost The following transactions were recorded for the year Raw materials were purchased, $315,200. . Raw materials were requisitioned for use in production, $307.200 ($280,800 direct and $26,400 indirect) The following employee costs were incurred: direct labor, $377,200, indirect labor, $96.200: and edministrative salaries $172,200. Selling costs, $147.200 Factory utility costs, $10,200 is related to factory operations and $18,600 is related to selling. general, and administrative activaies Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,040 machine-hours Sales for the year totaled $1,261,000 Required a Prepare a schedule of cost of goods manufactured Was the overhead underapplied or overapplied? By how much? C. Prepare an income statement for the year The company cioses any underapplied or overapplied overhead to Cost of Goods Sold Prev 9 of 10 Next > 3 0Explanation / Answer
Solution a:
Predetermined overhead rate = Estimated overhead / Estimated machine hours = $245,680 / 33200 = $7.40
Solution b:
Actual overhead incurred = Indirect material + Indirect labor + Factory utility cost + Depreciation related to factory operation
= $26,400 + $96,200 + $10,200 + $120,400 = $253,200
Manufacturing overhead applied = $251,896
As actual manufacturing overhead was higher than manufacturing overhead applied, it means overhead was underapplied
Underapplied overhead = $253,200 - $251,896 = $1,304
Solution c:
Baab Corporation Schedule of cost of goods manufactured Particulars Details Amount Direct Material: Beginning material inventory $14,200.00 Cost of material purchased $315,200.00 Cost of material available $329,400.00 Less: Ending material inventory $22,200.00 Total material used $307,200.00 Less: Indirect material used $26,400.00 Direct material used $280,800.00 Direct labor $377,200.00 Manufacturing overhead applied (34040 * $7.40) $251,896.00 Total manufacturing cost for the year $909,896.00 Add: Beginning WIP $27,200.00 Total cost of work in process during the year $937,096.00 Less: Ending WIP $9,200.00 Cost of goods manufactured $927,896.00Related Questions
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