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Homework answers / question archive / Corster is a small Burton manufacturer in job order costing
Corster is a small Burton manufacturer in job order costing. Cortester unes de los hours to apply manting.. N the beginning of the yew manufacturing on thead was estimated to be $144,000 and direct labour hours we were estimated to the 12.000 The average hourly rate paid to manufacturing employees was $18. Actual manufacturing overhead for the year we $170 pon. Actus dieva labour hours and were 13,000, Required: Part 1: Calculate the predetermined overhead rate for the year. (3 marks) Predetermined overhead rate art 2: Job Z is one of the jobs that was worked on during the year. The details from the job cost sheet are shown below. JOB COST SHEET Job Z Direct materials Direct labour Manufacturing overhead $2,900 $3,600 $2 a. Compute the amount of overhead applied to Job Z. (3 marks) Manufacturing overhead applied Compute the total cost of Job Z. (1 mark) New
predetermined overhead rate Part 2: Job Z is one of the jobs that was worked on during the year. The details from the job cost sheet are shown below: JOB COST SHEET Job Z Direct materials Direct labour Manufacturing overhead $2,900 $3,600 $? a. Compute the amount of overhead applied to Job Z. (3 marks) Manufacturing overhead applied b. Compute the total cost of Job Z. (1 mark) Total cost of Job Z Sheet1 New
Manufacturing ved applied b. Compute the total cost of Job Z. (1 mark) 27 29 30 Total cost of lobz c. Assume that Job Z was completed but not yet sold by the end of July. Prepare the necessary journal entry. (1 mark) 31 32 33 34 35 Debit Credit Credit 3 Part 3: Prepare the journal entry to record the manufacturing overhead applied for the year. (5 marks) Manufacturing overhead applied Debit Credit art 4: Assume that the applied manufacturing overhead for the year, distributed to the following accounts in the amou
Part 4: Assume that the applied manufacturing overhead for the year, distributed to the following accounts in the amounts indicate Work in process inventory, end of the year Finished goods inventory, end of the year Cost of goods sold Overhead Applied $30,000 $50,000 ? 56 52 a. Prepare the journal entry to close over or under-applied overhead assuming the company does not allocate over or ur overhead. (4 marks) 58 59 60 61 62 53 Debit Credit 5 b. Assume the company follows IAS 2. Would the journal entry in part a change? (1 mark) c. Why or why not? Explain (2 marks)
Part 1:
Predetermined overhead rate= Budgeted overhead/ budgeted labour hours
= 144,000 / 12,000 hours = $ 12 per hour
Part 2:
A. Overhead is applied on the basis of labour hours
No of labour hours = Labour cost/ Labour rate = 3600/18 = 200 hours
Therefore, overhead applied = 200* 12 per hour = $ 2,400
B. Total cost of Job Z = $ 2,900 + 3,600 + 2,400 = $ 8,900
Part 3:
In this case, the overhead is over applied, i.e, the budgeted overhead is higher than the actual overhead. So, the net effect needs to be adjusted to cost of goods sold.
Overapplied overhead = (13,000 hours*12) - $ 120,000 = $ 36,000
This needs to be eliminated from COGS,
Journal entry will be,
Dr. Manufacturing overhead. $ 36,000
Cr. Cost of goods sold. $ 36,000
Part 4
A. If the company doesn't allocate over under or over applied overhead, then the full amount shall be deducted from COGS.
Dr. Manufacturing overhead. $ 116,000. (I.e, $ 36,000 + 30,000 + 50,000)
Cr. COGS. $ 116,000
B. Journal entry in part A will change as per IAS 2.
C. They have to be allocated to WIP, FG and COGS as per IAS2.
IF THEY ARE ALLOCATED,
Dr. Manufacturing overhead. $ 116,000
Cr. Work in progress. $ 30,000
Cr. Finished goods. $ 50,000
Cr. COGS. $ 36,000
