Question
In: Accounting
At the beginning of the year, Learer Company’s manager estimated total direct labor cost assuming 45...
At the beginning of the year, Learer Company’s manager estimated
total direct labor cost assuming 45 persons working an average of
2,000 hours each at an average wage rate of $25 per hour. The
manager also estimated the following manufacturing overhead costs
for the year.
| Indirect labor | $ | 325,200 | |
| Factory supervision | 233,000 | ||
| Rent on factory building | 146,000 | ||
| Factory utilities | 94,000 | ||
| Factory insurance expired | 74,000 | ||
| Depreciation—Factory equipment | 520,000 | ||
| Repairs expense—Factory equipment | 66,000 | ||
| Factory supplies used | 74,800 | ||
| Miscellaneous production costs | 42,000 | ||
| Total estimated overhead costs | $ | 1,575,000 | |
At year-end, records show the company incurred $1,820,000 of actual
overhead costs. It completed and sold five jobs with the following
direct labor costs: Job 201, $610,000; Job 202, $569,000; Job 203,
$304,000; Job 204, $722,000; and Job 205, $320,000. In addition,
Job 206 is in process at the end of the year and had been charged
$23,000 for direct labor. No jobs were in process at the beginning
of the year. The company’s predetermined overhead rate is based on
direct labor cost.
Required
1-a. Determine the predetermined overhead rate for the
year.
1-b. Determine the total overhead cost applied to
each of the six jobs during the year.
1-c. Determine the over- or underapplied overhead
at the year-end.
2. Assuming that any over- or underapplied
overhead is not material, prepare the adjusting entry to allocate
any over- or underapplied overhead to Cost of Goods Sold at the end
of the year.
Solutions
Expert Solution
1-a.
==> Estimated direct labor cost = 45 X 2000 hrs X $25 per hour = $2,250,000
==> Estimated overhead costs = $1,575,000
==> Predetermined overhead rate = Estimated
overhead cost / Estimated direct labor cost X 100
= $1,575,000 / $2,250,000 X 100
= 70% of direct labor cost.
1-b.
| Job 201 | Job 202 | Job 203 | Job 204 | Job 205 | Job 206 | Total | |
| Direct labor | $610,000 | $569,000 | $304,000 | $722,000 | $320,000 | $23,000 | 2,548,000 |
| Applied overhead (70% of DL) | 427,000 | 398,300 | 212,800 | 505,400 | 224,000 | 16,100 | 1,783,600 |
1-c.
==> Actual overhead cost incurred for the year = $1,820,000
==> Applied overhead cost = $1,783,600
==> Actual overhead is more than the applied overhead, therefore Overhead is $36,400 underapplied.
2.
| Date | General Journal | Debit | Credit |
| 31 | Cost of goods sold | 36,400 | |
| Factory overhead | 36,400 | ||
| (To adjust underapplied overhead) |
ekkarill92 answered 7 months agoRelated Solutions
At the beginning of the year, Learer Company’s manager estimated total direct labor cost assuming 45...
At the beginning of the year, Learer Company’s manager estimated
total direct labor cost assuming 45 persons working an average of
2,500 hours each at an average wage rate of $20 per hour. The
manager also estimated the following manufacturing overhead costs
for the year.
Indirect labor
$
330,200
Factory supervision
109,000
Rent on factory building
151,000
Factory utilities
99,000
Factory insurance expired
79,000
Depreciation—Factory equipment
384,000
Repairs expense—Factory equipment
71,000
Factory supplies used
79,800
Miscellaneous production costs
47,000
Total...
In December 2016, Learer Company’s manager estimated next year’s total direct labor cost assuming 45 persons...
In December 2016,
Learer Company’s manager estimated next year’s total direct labor
cost assuming 45 persons working an average of 2,000 hours each at
an average wage rate of $25 per hour. The manager also estimated
the following manufacturing overhead costs for 2017.
Indirect
labor
$
325,200
Factory
supervision
233,000
Rent on factory
building
146,000
Factory
utilities
94,000
Factory
insurance expired
74,000
Depreciation—Factory equipment
520,000
Repairs
expense—Factory equipment
66,000
Factory supplies
used
74,800
Miscellaneous
production costs
42,000
Total estimated
overhead...
In December 2016, Learer Company’s manager estimated next year’s total direct labor cost assuming 25 persons...
In December 2016, Learer Company’s manager estimated next year’s
total direct labor cost assuming 25 persons working an average of
2,000 hours each at an average wage rate of $40 per hour. The
manager also estimated the following manufacturing overhead costs
for 2017. Indirect labor $ 322,200 Factory supervision 219,000 Rent
on factory building 143,000 Factory utilities 91,000 Factory
insurance expired 71,000 Depreciation—Factory equipment 380,000
Repairs expense—Factory equipment 63,000 Factory supplies used
71,800 Miscellaneous production costs 39,000 Total estimated
overhead...
In December 2016, Learer Company’s manager estimated next year’s total direct labor cost assuming 30 persons...
In December 2016, Learer Company’s manager estimated next year’s
total direct labor cost assuming 30 persons working an average of
2,000 hours each at an average wage rate of $30 per hour. The
manager also estimated the following manufacturing overhead costs
for 2017.
Indirect
labor
$228,200
Factory
supervision
136,000
Rent on factory
building
149,000
Factory
utilities
97,000
Factory
insurance expired
77,000
Depreciation—Factory equipment
201,000
Repairs
expense—Factory equipment
69,000
Factory supplies
used
77,800
Miscellaneous
production costs
45,000
Total estimated
overhead costs...
In December 2016, Learer Company’s manager estimated next year’s total direct labor cost assuming 35 persons...
In December 2016, Learer Company’s manager estimated next year’s
total direct labor cost assuming 35 persons working an average of
3,000 hours each at an average wage rate of $20 per hour. The
manager also estimated the following manufacturing overhead costs
for 2017.
Indirect labor
$335,200
Factory supervision
165,000
Rent on factory building
156,000
Factory utilities
104,000
Factory insurance expired
84,000
Depreciation—Factory
equipment
413,000
Repairs expense—Factory
equipment
76,000
Factory supplies used
84,800
Miscellaneous production
costs
52,000
Total estimated overhead
costs...
In December 2010, Gomez Company’s manager estimated next year’s total direct labor cost assuming 50 persons...
In December 2010, Gomez Company’s manager estimated next year’s
total direct labor cost assuming 50 persons working an average of
2,020 hours each at an average wage rate of $15 per hour. The
manager also estimated the following manufacturing overhead costs
for year 2011.
Indirect labor
$
167,650
Factory
supervision
123,000
Rent on factory
building
76,000
Factory
utilities
46,000
Factory insurance
expired
35,100
Depreciation—Factory
equipment
249,000
Repairs
expense—Factory equipment
31,500
Factory supplies
used
34,400
Miscellaneous
production costs
10,000...
Total estimated cost of trip $45,500 Assuming that your estimated total cost will grow by 2.5%...
Total estimated cost of trip $45,500
Assuming that your estimated total cost will grow by 2.5% per
year (due to inflation), demonstrate how you would compute the
expected future cost of your dream vacation Suppose that you can
invest money every month into a fee-free mutual fund and that this
fund is expected to have a 10% nominal annual rate of return. Using
your estimated future cost (including inflation) as future value,
determine the amount of money you must save...
Miller Company’s total sales are $120,000. The company’s direct labor cost is $15,000, which represents 30%...
Miller Company’s total sales are $120,000. The
company’s direct labor cost is $15,000, which represents 30% of its
total conversion cost and 40% of its total prime cost. Its total
selling and administrative expense is $18,000 and its only variable
selling and administrative expense is a sales commission of 5% of
sales. The company maintains no beginning or ending inventories and
its manufacturing overhead costs are entirely fixed
costs.
Required:
1. What is the total manufacturing overhead
cost?
2. What...
Miller Company’s total sales are $210,000. The company’s direct labor cost is $25,200, which represents 30%...
Miller Company’s total sales are $210,000. The company’s direct
labor cost is $25,200, which represents 30% of its total conversion
cost and 40% of its total prime cost. Its total selling and
administrative expense is $31,500 and its only variable selling and
administrative expense is a sales commission of 5% of sales. The
company maintains no beginning or ending inventories and its
manufacturing overhead costs are entirely fixed costs.
Required:
1. What is the total manufacturing overhead cost?
2. What...
Miller Company’s total sales are $153,000. The company’s direct labor cost is $18,360, which represents 30%...
Miller Company’s total sales are $153,000. The company’s direct
labor cost is $18,360, which represents 30% of its total conversion
cost and 40% of its total prime cost. Its total selling and
administrative expense is $22,950 and its only variable selling and
administrative expense is a sales commission of 5% of sales. The
company maintains no beginning or ending inventories and its
manufacturing overhead costs are entirely fixed costs.
Required:
1. What is the total manufacturing overhead cost?
2. What...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Description Write a program that prints out your name, the course ID of this class, what...
- A project has an initial cost of $65,475, expected net cash inflows of $12,000 per year...
- Make a program that lets the user enter a positive or negative integer as many times...
- using java, parse a text file to be able to list the word(s) with the highest...
- Consider the following linear programming problem: Maximize 10X + 8Y Subject to: 40X + 24Y <=...
- Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies...
- Think about a company you have worked for, either currently or in the past. Reflect upon...
ADVERTISEMENT