The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost.
P3-24 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 $126,000 of manufacturing overhead for an estimated allocation base of $84,000 direct labor dollars.
The company has provided the following data.
Raw Materials $21,000 $16,000
Work in Process $44,000 $40,000
Finished Goods $68,000 $60,000
The following actual costs were incurred during the year:
Purchase of raw materials (all direct) $133,000
Direct labor cost $80,000
Manufacturing overhead costs:
Insurance, factory $7,000
Depreciation of equipment $18,000
Indirect labor $42,000
Property taxes $9,000
Rent, building $36,000
1-a. Compute the predetermined overhead rate for the year.
1-b. Compute the amount of under applied or over applied overhead for the year.
- Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in productions direct materials.
3-a. Compute the adjusted cost of goods sold for the year. (Do not include any under applied or over applied overhead in your cost of goods sold figure.)
3-b. Identify the options available for disposing of under applied or over applied overhead? (You may select more than one answer.
- Job 137 was started and completed during the year. What price would have been charged to the customer if the job required $3,200 in materials and $4,200 in direct labor cost, and compartmentalized its jobs at 40% above the job’s cost according to the accounting system?
- Direct labor made up $8,000 of the $40,000 ending Work in Process inventory balance. Supply the information missing below