Jackson Company applies overhead to products using a pre-determined rate of $11.

Question

 Jackson Company applies overhead to products using a pre-determined rate of $11.20 per direct labor hour.  During 2019, Jackson Company began work on three jobs. Information relating to these three jobs appears below:                                    Job #359      Job #360      Job #361 direct materials ..............    $98,000       $75,000       $91,000 direct labor cost .............    $98,600       $79,900       $86,700 direct labor hours ............      5,800         4,700         5,100  By the end of 2019, job #359 and job #361 had been completed. Job #360 was not completed by the end of 2019. Additionally, by the end of 2019, job #361 had been sold while job #359 was not sold. Jackson Company had total actual overhead cost of $169,000 during 2019.  Calculate the cost of goods sold reported by Jackson Company for 2019 after the overhead variance has been closed.

Explanation / Answer

Applied overhead = (5800+4700+5100)*11.20   = 174720

Actual overhead = 169000

Overapplied overhead = (174720-169000) = 5720

Calculate cost of goods sold :

Job 361 Direct material 91000 Direct labour 86700 Overhead applied (5100*11.20) 57120 Total manufacturing cost 234820 Less : Overapplied overhead (5720) Cost of goods sold 229100

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