Widmer Watercraft’s predetermined overhead rate for year 2015 is 200% of direct

Question

Widmer Watercraft’s predetermined overhead rate for year 2015 is 200% of direct labor. Information on the company’s production activities during May 2015 follows. a. Purchased raw materials on credit, $220,000. b. Materials requisitions record use of the following materials for the month. Job 136 $ 49,000 Job 137 33,000 Job 138 19,800 Job 139 22,800 Job 140 7,200 Total direct materials 131,800 Indirect materials 20,500 Total materials used $ 152,300 c. Paid $15,750 cash to a computer consultant to reprogram factory equipment. d. Time tickets record use of the following labor for the month. These wages were paid in cash. Job 136 $ 12,000 Job 137 10,500 Job 138 37,900 Job 139 39,200 Job 140 3,600 Total direct labor 103,200 Indirect labor 26,500 Total $ 129,700 e. Applied overhead to Jobs 136, 138, and 139. f. Transferred Jobs 136, 138, and 139 to Finished Goods. g. Sold Jobs 136 and 138 on credit at a total price of $535,000. h. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). Depreciation of factory building $ 68,500 Depreciation of factory equipment 36,500 Expired factory insurance 11,000 Accrued property taxes payable 35,500 i. Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

Explanation / Answer

Job no 136 Job no 137 Job no 138 Job no 139 Job no 140 Total Material          49,000          33,000          19,800          22,800           7,200     1,31,800 Labor          12,000          10,500          37,900          39,200           3,600     1,03,200 Overhead          25,057          21,000          79,139          81,854           7,200     2,14,250 Total Cost          86,057          64,500      1,36,839      1,43,854         18,000     4,49,250 Tfd to Finished Goods       (86,057)    (1,36,839)    (1,43,854) (3,66,750) WIP                   -            64,500                   -                     -           18,000         82,500 Sales      5,35,000 Less: Cost of Sales Job No 136           (86,057) Job No 138         (1,36,839)    (2,22,896) Gross Profit      3,12,104 Working Note Job no 136 Job no 137 Job no 138 Job no 139 Job no 140 Total Indirect Material Cost         20,500 Indirect Labor         26,500 Computer consultant         15,750 Depreciation Of Factory Building         68,500 Depreciation Of Factory Equipment         36,500 Factory Insurance         11,000 Property Taxes Payable         35,500 Application of Overhead          25,057          21,000          79,139          81,854           7,200     2,14,250 Ratio 200% of direct Labor 200% 200% Direct Labor          12,000          37,900          39,200         89,100 Ratio 13.47% 42.54% 44.00% 100%

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