: Tata Motors produces trucks for commercial use. The company
uses a normal job-order costing system to calculate its cost of
goods manufactured. On January 01, 2019, there was only one job in
process with the following costs:
Direct materials Direct labour Applied overhead Total
Job A-1 $ 5,000 15,000 18,000 $38,000
The following balances were taken from the general ledger of
the company as of January 1, 2019:
Direct materials inventory $35,000 Finished goods inventory
(for Job D-1) $65,000
During the year 2016, the following events occurred:
Direct materials were purchased on account for $275,000 Two
more jobs were started: Job B-1 and Job C-1.
Direct materials and direct labour costs incurred by each job
in process during the year 2019 are as follows:
Job A-1 Direct Materials $150,000 Direct Labour $150,000
Job B-1 $30,000 $35,000
Job C-1 $10,000 $15,000
The company incurred the following actual factory overhead
during the year:
Factory rent Factory supplies Indirect labour
$120,000 $ 45,500 $ 75,750
Jobs A-1 and B-1 were completed, and Jobs D-1 and A-1 were
sold.
a. Calculate the total applied overhead for the year 2019 if
the factory overhead costs are applied to each job on the basis of
direct labour dollars. [2 Marks]
b. Determine whether overhead is over-applied or
under-applied. By how much? [2 Marks]
c. Prepare simple job order cost sheets for jobs A-1, B-1, and
C-1. [3 Marks]
d. Prepare a schedule of cost of goods sold, identifying both
normal and adjusted cost of goods sold, for