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XYZ Co. has a job-order cost system. For the month of April, the following debits (credits)...

XYZ Co. has a job-order cost system. For the month of April, the following debits (credits) appeared in the general ledger account.
Based on direct labor cost, XYZ applies overhead to production at a predetermined rate of 120%
Job No. 100, the only job still in process at the end of January, has been charged with factory overhead of 6000
1-Jan 31-Jan
Direct materials 77,000 40,000
Work in process 66,000 42,000
Finished goods 115,000 100,000
Other information
Direct materials purchases 324,000
Cost of goods available for sale 940,000
Actual factory overhead costs 260,000
Required:
The amount of underapplied or overapplied overhead is:?
Indicate the amount if overapplied (O) or underapplied (U)?
The amount of direct materials charged to Job No. 100 was?

Solutions

Expert Solution

Cost of goods manufactured = Cost of goods available for sale - Beginning finished goods

Cost of goods manufactured = $940,000 - 115,000 = $825,000

Total manufacturing costs = Ending work in process + Cost of goods manufactured - Beginning work in process

Total manufacturing costs = $42,000 + 825,000 - 66,000 = $801,000

Direct material used = Beginning direct material + Purchases - Ending direct material

Direct material used = $77,000 + 324,000 - 40,000 = $361,000

Total manufacturing costs = Direct material used + Direct labor + Factory overhead

$801,000 = $361,000 + X + 1.2X

$801,000 = $361,000 + 2.2X

X = $440,000 / 2.2 = $200,000

Hence direct labor $200,000

Applied overhead = $200,000 * 1.2 = $240,000

Under or overapplied overhead = Actual overhead - Applied overhead

Under or overapplied overhead = $260,000 - 240,000

Underapplied overhead = $20,000

Job 100
Direct material ($42,000-5,000-6,000) $31,000
Direct labor (6,000/120*100) 5,000
Factory overhead 6,000
Total costs $42,000

The amount of direct materials charged to Job No. 100 is $31,000

ekkarill92 answered 1 year ago
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