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Hershey Company uses a job order costing system and applies manufacturing overheads on the basis of...

Hershey Company uses a job order costing system and applies manufacturing overheads on the basis of direct labor cost. Total manufacturing overhead was estimated to be $142,595 for the year; direct labor was estimated to total $150,100.

(1/1) (12/31)
Raw Materials Inventory $ 14,200 $ 9,400
Work in Process Inventory $ 20,000 $ 22,700
Finished Goods Inventory $ 42,500 $ 31,300


The following transactions have occurred during the year.

Raw materials purchases $ 111,000
Direct materials used $ 104,500
Direct labor $ 126,800
Indirect materials used $ 11,300
Indirect labor $ 16,300
Factory equipment depreciation $ 27,100
Factory rent $ 21,700
Factory utilities $ 9,100
Other factory costs $ 6,900


(a) Calculate the predetermined overhead rate.




(b) Calculate cost of goods manufactured.



(c) Calculate the over- or underapplied overhead. (Input the amount as positive value.)



(d) Calculate adjusted cost of goods sold.

Solutions

Expert Solution

a.

Estimated menufacturing overhead = $142,595

Estimated direct labor cost = $150,100

Predetermined overhead rate = Estimated menufacturing overhead/Estimated direct labor cost

= 95% of direct labor cost

b.

Overhead applied = Actual direct labor cost x Predetermined overhead rate

= 126,800 x 95%

= $120,460

Schedule of cost of goods manufactured

Raw meterial, beginning 14,200
Raw material purchases 111,000
Total raw material available 125,200
Raw metrial, ending -9,400
Direct material used 115,800
Direct labor 126,800
Overhead applied 120,460
Total manufacturing cost 363,060
Work in process, beginning 20,000
Work in process, ending -22,700
Cost of goods manufactured $360,360

c.

Actual manufactruing overherad = Indirect material used + Indirect labor + Factory equipment depreciation + factory rent + Factory utilities + Other factory costs

= 11,300 + 16,300 + 27,100 + 21,700 + 9,100 + 6,900

= $92,400

Overapplied Overhead = Overhead applied - Actual manufactruing overherad

= 120,460 - 92,400

= $28,060

d.

Schedule of cost of goods sold

Finished goods, beginning

42,500

Cost of goods manufactured

 360,360

Cost of goods available for sale

 402,860

Finished goods, ending

-31,300

Unadjusted cost of goods sold

 371,560

Overapplied overhead

 -28,060

Adjusted cost of goods sold

 $343,500

ekkarill92 answered 1 year ago
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