Question

Jackson Company applies overhead to products using a pre
determined rate of $12.10 per direct labor hour.

During 2019, Jackson Company began work on three jobs.
Information relating to these three jobs appears below:

                           Job #359   Job #360   Job #361
direct materials .......    $98,000    $75,000    $91,000
direct labor cost ......    $95,200    $79,900    $69,700
direct labor hours .....      5,600      4,700      4,100

By the end of 2019, job #359 and job #361 had been completed.
Job #360 was not completed by the end of 2019. Additionally,
by the end of 2019, job #361 had been sold while job #359 was
not sold. Jackson Company had total actual overhead cost of
$169,000 during 2019.

a.) Calculate the amount of finished goods inventory reported in
Jackson Company's December 31, 2019 balance sheet.

b.) Calculate the cost of goods sold reported by Jackson Company
for 2019 after the overhead variance has been closed.

Answer 1

Answer:
Only Job # 359 Completed
Manufacturing Overhead applied to Job # 359      = Pre -determined rate x Direct Labor Hours      = $ 12.10 x 5,600 DLH	$ 67,760
Applied Overhead    = Pre -determined rate x Total Direct Labor Hours    = $ 12.10 x ( 5,600 + 4,700 + 4,100)    = $ 12.10 x 14,400	$ 174,240
Overhead Under / Over Applied    = Actual overhead (-) Applied Overhead    = $ 169,000 (-) $ $ 174,240	$ 5,240 (OverApplied)
(a)
Particulars	Amount
Direct material	$ 98,000
Direct labour	$ 95,200
Manufacturing Overhead applied	$ 67,760
Finished goods inventory in December 31, 2019 balance sheet	$ 260,960
(b)
Particulars	Amount
Direct material	$ 98,000
Direct labour	$ 95,200
Manufacturing Overhead applied	$ 67,760
Less: Over Applied Overhead	($ 5,240)
Cost of goods sold after the overhead variance has been closed	$ 255,720