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Question

Wells Corporation, which uses a job-costing system, had two jobs in process at the start of February 2019: Job no.

C6 with a cost of $105,000 and job no. D1 with a cost of $25,000. The following information is available:

 

·      The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and machine activity for the year were anticipated to be $3,264,000 and 102,000 hours, respectively.

 

·      The company worked on four jobs during February. Direct materials used, direct labor incurred, and machine hours consumed were:

 

Job No.

Direct Material

Direct Labor

Machine Hours

C6

        152,000

      127,000

         1,600

D1

        179,000

      103,000

        2,500

D2

        212,000

     135,000

        2,000

D3

         70,000

       85,000

         1,500

 

·      Manufacturing overhead during February included charges for depreciation ($52,000), indirect labor ($100,000), indirect materials used ($38,000), and other factory costs ($48,000).

 

·      Wells completed job no. C6 and job no. D1. Job no. C6 was sold for cash, producing a gross profit of $142,600 for the firm.

 

Required:

1.    Compute the company's predetermined overhead application rate. State it in terms of cost per machine hour.

 

 

Predetermined overhead rate per machine hour:

 

 

 

 

2.    Compute Total Manufacturing costs (use applied overhead - not actual overhead).

 

 

Total manufacturing costs:

 

 

 

 

3.    Compute the (unadjusted) Cost of Goods Sold.

 

 

Cost of goods sold:

 

 

 

4.    Compute the Cost of Goods Manufactured (use applied overhead - not actual overhead).

 

 

Cost of goods manufactured:

 

 

 

 

5.    Compute the cost of Ending Work-in-Process Inventory (use applied overhead - not actual overhead).

 

 

Cost of Ending Work-In-Process Inventory:

 

 

 

 

 

6.    Compute (and identify) the amount of over- or under-applied overhead.

 

 

Over- or under-applied overhead (and which one):

 

 

 

Top Answer

1.Predetermined overhead rate per machine hour: $32 /machine hour 2. Total... View the full answer

CH_Job Order.png

Job. No.
C6
D1
D2
D3
Sum
Direct Material
152,000
179,000
212,000
70,000
613,000
Direct Labor
127,000
103,000
135,000
85,000
127,000
Machine Hour
1,600
2,500
2,000
1,500
7,600
Predetermined OH per...

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