In: Accounting
Accounting II (Ludwig)
Graded Assignment 7 – Chapter 19
Spring 2019
In December 2017, Challenger Watercraft’s manager estimated next year’s (2018) total direct labor cost assuming five employees working an average of 2,000 hours each at an average wage rate of $10 per hour ($100,000). The manager also estimated manufacturing overhead costs for 2017 of $200,000.
At the end of 2018, records show the company incurred $199,000 of actual overhead costs.
The following jobs were started and completed and were charged with the following direct material and labor costs.
Job |
Direct Material |
Direct Labor |
Manufacturing Overhead |
Total Cost of Job |
136 |
$50,000 |
$12,100 |
||
137 |
$33,000 |
$10,800 |
||
138 |
$19,800 |
$37,500 |
||
139 |
$22,600 |
$39,400 |
||
140 |
$6,800 |
$3,200 |
||
Totals |
$132,200 |
$103,000 |
Required
1] | Predetermined OH rate = Estimated overhead/Estimated base = 200000/100000 = | 200.00% | of direct labor cost | ||
2] | JOBWISE COST OF PRODUCTION: | ||||
JOB NO | Direct Material | Direct Labor | Mfg. OH Applied | Total Cost of Job | |
136 | $ 50,000 | $ 12,100 | $ 24,200 | $ 86,300 | |
137 | $ 33,000 | $ 10,800 | $ 21,600 | $ 65,400 | |
138 | $ 19,800 | $ 37,500 | $ 75,000 | $ 1,32,300 | |
139 | $ 22,600 | $ 39,400 | $ 78,800 | $ 1,40,800 | |
140 | $ 6,800 | $ 3,200 | $ 6,400 | $ 16,400 | |
Total | $ 1,32,200 | $ 1,03,000 | $ 2,06,000 | $ 4,41,200 | |
3] | Actual overheads | $ 1,99,000 | |||
Overhead applied | $ 2,06,000 | ||||
Overapplied OH = 206000-199000 = | $ 7,000 |
MANUFACTURING OVERHEAD | |||
Cash/AP | $ 1,99,000 | $ 2,06,000 | OH applied |
End bal | $ 7,000 |