Bynum manufacturing uses a job order cost system and applies overhead to product
ID: 2448544 • Letter: B
Question
Bynum manufacturing uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1,2012, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $19,500, direct labor $11,150, and manufacturing overhead $16,810. As of January I , job No, 49 had been completed at a cost of $ 89,720 and was part of finished goods inventory. There was a $ 15,640 balance in the Raw Materials Inventory account. During the month of January Bynum Manufacturing began production on Jobs 51 and 52 , and complete Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $12,700 and $158,400, respectively. The following additional events occurred during the month.Explanation / Answer
Predetermined overhead rate = Total manufacturing overhead rate/ total direct labor cost
( Don't get confuse by direct labor hours given, the question clearly states that the overhead rate is based on direct labor cost)
hence predetermined overhead rate = $1048,025/ $699,110 = 150%
( this is what i read the figures since they were hazy ,you can make the change and calulate the same)
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