Clark Co. uses normal absorption job order costing. Factory Overhead is applied

Question

Clark Co. uses normal absorption job order costing. Factory Overhead is applied to production at a budgeted rate of 300% of prime costs (direct materials plus direct labor). Clark Co. policy is to not pro-rate any over or under applied overhead amounts. All inventory amounts listed next are after disposition of any over or under applied overhead.


Direct Labor = $100,000
Beginning balance of stores (direct materials) = $20,000
Ending Balance of stores = $20,000
Purchased $50,0000 of direct materials during period
Beginning Balance of work in process = $300,000
Cost of Goods Sold = $350,000
Finished goods beg. Inventory = $100,000
Finished goods ending inventory = $200,000




Determine the following: (please show work)
1.Direct Materials used
2.Factory Overhead Applied
3.Cost of goods manufactured
4.Actual factory overhead for the period.

Explanation / Answer

Beginning balance of stores (direct materials) 20000 ADD:-Purchased $500,000 ($20,000) Direct materials (in 1st point) $500,000 Direct labor $100,000 Factory Overhead is applied is 300% of prime cost $350,000 Less:Finished goods beg. Inventory $100,000 $200,000 Cost of goods manufactured 1) Beginning balance of stores (direct materials) 20000 ADD:-Purchased $500,000 Total raw matireals available $520,000 Less:-Ending Balance of stores ($20,000) Direct materials used $500,000 2) Direct materials (in 1st point) $500,000 Direct labor $100,000 Prime costs $600,000 Factory Overhead is applied is 300% of prime cost so $600,000 multiply with 300% There fore it is 1,800,000 Factory Overhead is applied 1,800,000 3) Cost of goods sold $350,000 Less:Finished goods beg. Inventory $100,000 Add:Finished goods ending inventory $200,000 Cost of goods manufactured $450,000

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