Question

Overhead Application and Job-Order Costing

Heurion Company is a job-order costing firm that uses a plantwide overhead rate based on direct labor hours. Estimated information for the year is as follows:

Overhead	$789,000
Direct labor hours	100,000

Heurion worked on five jobs in July. Data are as follows:

	Job 741	Job 742	Job 743	Job 744	Job 745
Balance, July 1	$29,870	$55,215	$27,880	$0	$0
Direct materials	$25,500	$39,800	$14,450	$13,600	$8,420
Direct labor cost	$61,300	$48,500	$28,700	$24,500	$21,300
Direct labor hours	4,000	3,400	1,980	1,600	1,400

By July 31, Jobs 741 and 743 were completed and sold. The remaining jobs were in process.

	Required:
1.	Calculate the plantwide overhead rate for Heurion Company. Round to the nearest cent.
2.	Prepare job-order cost sheets for each job showing all costs through July 31. Round all amounts to the nearest dollar.
3.	Calculate the balance in Work in Process on July 31.
4.	Calculate Cost of Goods Sold for July.

Answer 1

1

Overhead	789000
Direct labor hours	100000
Overhead rate per hour	7.89

2, 3, 4

Particulars	Job 741	Job 742	Job 743	Job 744	Job 745	Total
Balance, July 1	29,870	55,215	27,880	-	-
Direct materials	25,500	39,800	14,450	13,600	8,420
Direct labor cost	61,300	48,500	28,700	24,500	21,300
Overhead	31,560	26,826	15,622	12,624	11,046
Total cost	148,230	170,341	86,652	50,724	40,766	496,713
Cost of goods sold	148,230.00		86,652.20			234,882
Ending inventory		170,341.00		50,724.00	40,766.00	261,831