The Pacific Manufacturing Company operates a job-order costing system and applie

Question

The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $118,300 of manufacturing overhead for an estimated allocation base of $91,000 direct labor dollars. The company has provided the following data:

Compute the predetermined overhead rate for the year.

Compute the amount of underapplied or overapplied overhead for the year. (Input the amount as a positive value.)

Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials. (Input all amounts as positive values.)

Compute the unadjusted cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.)

Job 137 was started and completed during the year. What price would have been charged to the customer if the job required $3,400 in materials and $4,900 in direct labor cost, and the company priced its jobs at 30% above the job’s cost according to the accounting system?

Direct labor made up $8,600 of the $38,000 ending Work in Process inventory balance. Supply the information missing below:

Work in process inventory$ 38,000

The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $118,300 of manufacturing overhead for an estimated allocation base of $91,000 direct labor dollars. The company has provided the following data:

Explanation / Answer

1-a Predetermined Overhead rate = Estimated Manufacturing Overheads / Estimated Labor Cost

Predetermined OH rate = 118300 / 91000 = 1.3 or 130%

1-b Actual Manufacturing Overhead = 10000 + 20000 +25000 + 8300 + 15000 + 39000 = 117300

Applied Overhead = 87000 x 130% = 113100

Overhead Underapplied = 117300 - 113100 = 4200 Underapplied

2 Cost of Goods Manufactured

Direct Materials:

Raw Material Purchases 140000

Add: Beginning Raw Material 27000

Total Material available 167000

Less: Ending Raw material 18000

Raw material Used in production 149000

Add: Direct Labor 87000

Add: Manufacturing Overheads 117300

Total Manufacturing Costs 353300

Add: Beginning Work in process 49000

Less: Ending Work in process 38000

Cost of goods Manufactured 364300

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