Question

In: Accounting

Haughton Company uses a job costing system for its production costs and a predetermined factory overhead...

Haughton Company uses a job costing system for its production costs and a predetermined factory overhead rate based on direct labor costs to apply factory overhead to all jobs. During the month of July, the firm processed three jobs: X13, X14, and X15, of which X13 was started in June.

Account July 1 July 31
Iventories
Direct Materials 38,300 ?
Work - In - Process 44600 ?
Finished Goods 0 0
COGS ?
Direct Materials Purchased in July 73,000
Materials issued to production:
X13 18,540
X14 38,620
X15 14,900
Factory Labor Hours used ( 30$/Hour)
X13 4,400
X14 3,700
X15 2,500
Indirect Labor 7800
Other Factory OH Cost Incurred
Rent 140,500
Utilities 996,000
Repairs and Maintenace 197,500
Depreciation 140,100
Other 65,000


As of July 31, Job X13 was sold and Jobs X14 and X15 were still in process.

Total factory overhead applied in July was $1,780,800.

Required:

1. Compute the predetermined factory overhead rate.

2. Compute the amount of the Direct Materials account at the end of July.

3. Compute the actual factory overhead cost incurred during the month of July.

4. Compute the ending balance of the Work-in-Process Inventory account for July.

5. Prepare the Statement of Cost of Goods Manufactured for July.

6. Compute the amount of overapplied or underapplied overhead.

7. What is the cost per unit of Job X13 if it has a total of 100 units?

8. Prepare the Statement of Cost of Goods Sold for July.

Solutions

Expert Solution

Formula sheet

A B C D E F G H I J
2
3
4 Account 43282 43312
5 Inventories
6 Direct Materials 38300 ?
7 Work - In - Process 44600 ?
8 Finished Goods 0 0
9 COGS ?
10 Direct Materials Purchased in July 73000
11 Materials issued to production:
12 X13 18540
13 X14 38620
14 X15 14900
15 Factory Labor Hours used ( 30$/Hour)
16 X13 4400
17 X14 3700
18 X15 2500
19 Indirect Labor 7800
20 Other Factory OH Cost Incurred
21 Rent 140500
22 Utilities 996000
23 Repairs and Maintenace 197500
24 Depreciation 140100
25 Other 65000
26
27 1)
28 Since direct labor cost is the basis for overhead allocation, therefore
29 Predetermined overhead rate =Total Overhead Applied / Total Labor cost
30
31 Total Overhead applied 1780800
32 Total labor cost =SUM(D16:D18)*30 =SUM(D16:D18)*30
33
34 Predetermined overhead rate =Total Overhead Applied / Total Labor cost
35 =D31/D32 =D31/D32
36
37 Total predetermined overhead rate =D35 of direct labor cost
38
39 2)
40
41 Ending Inventory of Direct Materials =Beginning Inventory + Purchases - Materials used in production
42 =D6+D10-SUM(D12:D14) =D6+D10-SUM(D12:D14)
43
44 Ending Inventory of Direct Materials =D42
45
46
47 3)
48
49 Actual Overhead costs incurred are as follows:
50
51 Indirect Labor =D19
52 Rent =D21
53 Utilities =D22
54 Repairs and Maintenace =D23
55 Depreciation =D24
56 Other =D25
57 Total actual manufacturing overhead =SUM(D51:D56)
58
59 Hence actual manufacturing overhead is =D57
60
61 4)
62 Since Job X13 was sold and was in begnning, therefore the ending work in process will
63 be total cost of jobs X14 and X15.
64
65 Ending work in progress =Total Cost of Job X14 + Total Cost of Job X15
66
67 Total cost of job X14 can be calculated as follows:
68 Direct materials =D13
69 Labor cost =D17*30
70 Overhead cost applied =D69*D37
71 Total cost of job X14 =SUM(D68:D70) =SUM(D68:D70)
72
73 Total cost of job X15 can be calculated as follows:
74 Direct materials =D14
75 Labor cost =D17*30
76 Overhead cost applied =D75*D37
77 Total cost of job X15 =SUM(D74:D76) =SUM(D74:D76)
78
79
80 Ending work in progress =Total Cost of Job X14 + Total Cost of Job X15
81 =D71+D77 =D71+D77
82
83 Hence ending work in progress =D81
84

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