Problem 15-1A Degelman Company uses a job order cost system and applies overhead
ID: 2425205 • Letter: P
Question
Problem 15-1A Degelman Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2014, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of January 1, Job No. 49 had been completed at a cost of $90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account. During the month of January, Deglman Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month 1. 2. 3. purchased additional raw materials of 90,000 on account. Incurred factory labor costs of $70,000. Of this amount $16,000 related to employer payroll taxes Incurred manufacturing overhead costs as follows: indirect materials 17,000; indirect labor 20,000; depreciation expense on equipment on account $16,000 Assigned direct materials and direct labor to jobs as follows 19,000; and various other manufacturing overhead costs 4. Job No 50 51 52 Direct Materials Direct Labor $10,000 39,000 30,000 $5,000 25,000 20,000 Calculate the predetermined overhead rate for 2014, assuming Degelman Company estimates total manufacturing overhead costs of $980,000, direct labor costs of $700,000, and direct labor hours of 20,000 for the year. (Round answer to the nearest whole percent, e.g. 25.) Predetermined overhead rateExplanation / Answer
1. Predetermined Overhead Rate = Total Manufacturing Overhead / Total labour cost = 980,000/700,000= 140% of
Direct labour
2. Job No. 50
Date Direct Material Direct labour Manufacturing OH
Beg $ 20,000 $ 12,000 $ 16,000
Jan 1 10,000 5,000 7,000_____
(10,000+39,000+30,000)
Work in porcess a/c 50,000
Factory labour a/c 50,000
( 5,000+25,000+20,000)
Work in process a/c 70,000
Manufacturing overhead a/c 70,000
(50,000 x 140%)
Finished Goods Inventory a/c 179,000
Work in process inventory a/ c 179,000
Journal entries to record sale of the job :
Accounts Receivables a/c 122,000
Sales a/c 122,000
(Being jobs 49 was sold)
Accounts Receivable a/c 158,000
Sales a/c 158,000
(Job No. 50 was sold)
Finished Goods Inventory a/c____________________
End. Bal 109,000 !
Mamufacturing Overhead a/c_________________
Hence, Manufacturing over/under applied $ 2,000