Question
In: Accounting
A manufacturing company employs job order costing to account for its costs. There are two production...
A manufacturing company employs job order costing to account for its costs. There are two production departments, and separate departmental overhead application rates are employed because the operations of the departments are distinct. All jobs generally pass through both production departments. Data regarding the hourly direct labor rates, overhead application rates, and three jobs on which work was done during the month appear below. Job 101 and Job 102 were completed during the current month. (CIA Examination adapted)
|
Production Departments |
Direct Labor Rate / hr |
MOH Rate |
|
|
Department 1 |
$21.00 |
50% |
of direct materials |
|
Department 2 |
$26.00 |
75% |
of direct labor cost |
|
Job 101 |
Job 102 |
|
|
Beginning Work-in-Process |
$25,500 |
$32,400 |
|
Direct materials added: |
||
|
Department 1 |
$40,000 |
$26,000 |
|
Department 2 |
$3,000 |
$5,000 |
|
Direct labor hours added: |
||
|
Department 1 |
500 |
400 |
|
Department 2 |
200 |
250 |
QUESTION: What is the total manufacturing cost of Job 102? (Round to the nearest dollar.)
QUESTION: What are the total manufacturing costs added to Job 101 in Department 2? (Round to the nearest dollar.)
QUESTION: What is the total manufacturing cost of Job 101? (Round to the nearest dollar.)
QUESTION: What are the total manufacturing costs added to Job 102 in Department 2? (Round to the nearest dollar.)
QUESTION: What are the total manufacturing costs added to Job 101 in Department 1? (Round to the nearest dollar.)
Solutions
Expert Solution
1) Total manufacturing cost of Job 102
| Job 102 | |
| Beginning WIP | 32400 |
| Dept 1 (26000+400*21+26000*50%) | 47400 |
| Dept 2 (5000+250*26+6500*75%) | 16375 |
| Total manufacturing cost | 96175 |
2) Total manufacturing cost added to Job 101 in Department 2
| Job 101 | |
| Direct material | 3000 |
| Direct labor (200*26) | 5200 |
| Overhead (5200*75%) | 3900 |
| Total manufacturing cost | 12100 |
3) Total manufacturing cost of Job 101
| Job 101 | |
| Beginning WIP | 25500 |
| Dept 1 (40000+500*21+40000*50%) | 70500 |
| Dept 2 ( | 12100 |
| Total manufacturing cost | 108100 |
4) Total manufacturing Costs added to Job 102 in Department 2
| Direct material | 5000 |
| Direct labor (250*26) | 6500 |
| Overhead (6500*75%) | 4875 |
| Total manufacturing cost | 16375 |
5) Total manufacturing cost added to Job 101 in Department 1
| Dept 1 | |
| Direct material | 40000 |
| Direct labor (500*21) | 10500 |
| Overhead (10500*50%) | 5250 |
| Total manufacturing cost added | 55750 |
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Direct labor-hours
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The company prepared an estimate of overhead costs at different
volumes for the current year as follows:
Direct labor-hours
150,000
180,000
210,000
Variable overhead costs
$
1,050,000
$
1,260,000
$
1,470,000
Fixed overhead costs
684,000
684,000
684,000
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$
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$
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$
2,154,000
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based on direct labor-hours to apply overhead to individual jobs.
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volumes for the current year as follows.
Direct labor-hours
150,000
180,000
210,000
Variable overhead costs
$
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$
1,080,000
$
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630,000
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150,000
180,000
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$
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$
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