Group 2 - P 21 - Group 2 Problem 221 Quan Nhan Timeless...

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Group 2 Problem 2- 21 Quan Nhan
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Timeless Products uses a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in productions ( not on basis of raw materials purchased). In computing a predetermined overhead rate at the beginning of the year, the company's estimates were: manufacturing overhead cost, $360,000; and direct materials to be used in production, $288,000. The company has provided the following data.
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Timeless Products Chart Beginnin g Ending Raw Materials $4,000 $39,000 Work in Process $100,000 $45,000 Finished Goods $300,000 $280,000 Purchase of raw materials (all direct) $450,000 Direct labor cost $65,000 Manufacturing overhead costs Insurance, factory $4,250 Depreciation of equipment $190,000 Indirect labor $145,000 Property taxes $10,000 Maintenance $60,000 Rent, building $94,000
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1. a. Compute the predetermined overhead rate for the year. Estimated total manufacturing overhead cost Predetermined = overhead rate Estimated total amount of the allocation base $360,000 = $288,000 direct materials cost = 125% of direct materials cost
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