Question

Write the calculation process, please

KU   Company   Private Limited uses a job-order costing system and a predetermined overhead rate based on machine hours.

At the beginning of the year, the company estimated manufacturing overhead for the year would be $250,000 and 10,000 machine hours would be used.

The following information pertains to the month of April of the current year:

Work-in-process, April 1:	Job #180	Job #181	Job #182
Prime cost	$17,500	$25,500	$24,000
Applied overheads	$ 2,500	$ 3,000	$ 7,500
April production activity:
Direct material requisitioned	$ 4,000	$ 4,800	$ 6,000
Direct labour costs	$ 3,200	$ 4,200	$ 2,800
Ma chine hours used	300	500	800

Actual manufacturing overhead costs for the month of April were $38,600. Job #180 and #182 were completed in April.

1. Prime costs for Job # 180 amounted to: A.       $21,500

B.         $24,000

C.         $24,700

D.         $27,200

E.         $28,058

F.         $34,700

2. Conversion costs for Job # 182 in the month of April amounted to : A.       $ 5,888

B.        $ 8,800

C.        $11,888

D.        $22,800

E.        $28,800

F.         None of the above

3. The amount of underapplied or overapplied overhead for the month of April was:

1. $0

B.        $11,600

C.        $38,600

D.        $40,000

E.        $210,000

F.         None of the above

Q2. MA Company uses a job cost system in costing its jobs. In addition to the two dire ct cost c ategories (dire ct material s and dire ct labor), the company applies manufacturing overhead costs on the basi s of dire ct labor hours worke d. For the month   of October, 2007,   the following information was extra cted from   its a ccounting records:

1. Beginning inventory (1.10.2007) – direct materials: $50,000
2. Beginning inventory, Work-in-process (WIP) – Job # 123: $80,000 c. Beginning inventory, Work-in-process (WIP) – Job # 125: $125,000

4. Beginning inventory, Work-in-process (WIP) – Job # 128: $68,000
5. Total direct materials issued to the various jobs during October were as followed:

i. Job #123: $ 50,000

ii. Job #125: $ 30,000 iii. Job #128: $125,000 iv. Job #129: $ 55,000 v. Job #130: $ 30,000 TOTAL $290,000

6. Total direct labor costs for the month amounted to $52,000, all production

workers were paid the same rate, the dire ct labor hours (DLH) worke d for ea ch job during the month were as follows:

1. Job #123:   400 DLH
2. Job #125:   600 DLH
3. Job #128: 1,000 DLH
4. Job #129:   400 DLH v. Job #130: 200 DLH TOTAL 2,600 DLH

7. Manufacturing overhead is alloc ated using a predetermined overhead rate (POHR). POHR is currently $12 per DLH.
8. Closing inventory – direct materials: $60,000
1. Job #129 and Job #130 remained unfinished on 31.10.2007.
10. Total Actual Manufacturing Overhead amounted to $30,200.

1. For the month of October, manufa cturing overhead was:

1. $ 800 overapplied
2. $ 800 underapplied
3. $1,200 overapplied
4. $1,200 underapplied
5. None of the above

2. Cost of goods manufa ctured for Job #128 was:

A.        $157,000

B.        $213,000

C.        $225,000

D.        $233,000

E.        None of the above

3. The dollar amount for the clos ing inventory, WIP of Job #130 was:

A.        $30,000

B.        $34,500

C.        $36,500

D.        $40,500

E.        None of the above

4. Material purchased duri ng October amounted to: A. $290,000

B.        $300,000

C.        $310,000

D.        $320,000

E.        None of the above

Answer 1

Question 1 :

1. Prime Costs for Job # 180 amounted to C. $ 24,700

Prime Cost = Direct Materials + Direct Labor

Prime costs for Job # 180 = $ 17,500 + $ 4,000 + $ 3,200 = $ 24,700

2. Conversion costs for Job # 182 in April amounted to D. $ 22,800.

Predetermined overhead rate = $ 250,000 / 10,000 MH = $ 25.

Conversion costs = Direct Labor + Overhad = $ 2,800 + 800 MH x $ 25 = $ 22,800.

3. The amount of underapplied or overapplied overhead for the month of April was : F. None of the above.

Amount of overhead applied = 1,600 MH x $ 25 = $ 40,000.

Amount of overapplied overhead = $ 40,000 - $ 38,600 = $ 1,400

Question 2 :

1. For the month of October, Manufacturing Overhead was : E. None of the above.

For the month of October, manufacturing overhead applied = 2,600 DLH x $ 12 = $ 31,200.

Actual manufacturing overhead for October : $ 30,200.

Manufacturing overhead overapplied : $ 31,200 - $ 30,200 = $ 1,000.

2.Cost of Goods Manufactured for Job # 128 : C. $ 225,000.

3. The dollar amount for the closing inventory, WIP of Job #130 was: E. None of the above.

Closing inventory of WIP for Job # 130 = ( Beginning Inventory + Direct Materials + Direct Labor + Overhead Applied ) = $ ( 0 + 30,000 + 200 x $ 20 + 200 x $ 12 ) = $ 36,400

4. Materials purchased during October amounted to : B. $ 300,000.

Materials purchased during October: Ending Inventory of Direct Materials + Materials Issued to Production - Beginning Inventory of Direct Materials = $ 60,000 + $ 290,000 - $ 50,000 = $ 300,000.