On January 1, there were two jobs in process, no. 200 and no. 300. The following
ID: 2552897 • Letter: O
Question
On January 1, there were two jobs in process, no. 200 and no. 300. The following costs were applied to these jobs in the prior year:
Job No.
200
300
Direct material
$ 5,000
$ 8,000
Direct labor
4,000
3,000
Overhead
4,400
3,300
Total
$13,400
$14,300
During January, the following transactions took place:
*
Raw material costing $40,000 was purchased on account.
*
Jobs #424, #525 and #626 were started and the following costs were applied to them:
JOB
424
525
626
Direct materials
$3,000
$10,000
$7,000
Direct labor
5,000
6,000
4,000
*
Job #200 and Job #300 were completed after incurring additional direct labor costs of $2,000 and $4,000, respectively
*
Wages paid to production employees during January totaled $25,000.
*
Depreciation for the month of January totaled $10,000.
*
Utilities bills in the amount of $10,000 were paid for operations during December.
*
Utilities bills totaling $12,000 were received for January operations.
*
Supplies costing $2,000 were used.
*
Miscellaneous overhead expenses totaled $24,000 for January.
Actual overhead is applied to individual jobs at the end of each month using a rate based on actual direct labor costs.
Required:
1
Determine the January overhead rate.
2
Determine the cost of each job.
3
Prepare a statement of cost of goods manufactured.
Job No.
200
300
Direct material
$ 5,000
$ 8,000
Direct labor
4,000
3,000
Overhead
4,400
3,300
Total
$13,400
$14,300
Explanation / Answer
1. January overhead rate = Actual overhead/Actual direct labor costs = $48000/$25000 = 192% of direct labor cost
2.
3.
Actual overheads: Depreciation 10000 Utilities 12000 Supplies 2000 Miscellaneous overheads 24000 Total $ 48000