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:
· 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.
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):