P4-10 Con-Aggie
Manufacturing Company is studying the results of applying factory overhead to
production. The following data have been used: estimated factory overhead:
$60,000; estimated materials costs, $50,000; estimated direct labor costs
$60,000; estimated direct labor hours 10,000; estimated machine hours 20,000;
work in process at the beginning of the month, none.
The actual factory overhead incurred
for the month of November was $75,000, and the production statistics on
November 30 are as follows:
|
Job
|
Materials Cost
|
Direct Labor Costs
|
Direct Labor Hours
|
Machine Hours
|
Date Jobs Completed
|
|
101
|
5,000
|
6,000
|
1000
|
3,000
|
10-Nov
|
|
102
|
7,000
|
12,000
|
2,000
|
3,200
|
14-Nov
|
|
103
|
8,000
|
13,500
|
2,500
|
4,000
|
20-Nov
|
|
104
|
9,000
|
15,600
|
2,600
|
3,400
|
In process
|
|
105
|
10,000
|
29,000
|
4,500
|
6,500
|
26-Nov
|
|
106
|
11,000
|
2,400
|
400
|
1,500
|
In process
|
|
Total
|
50,000
|
78,500
|
13,000
|
21,600
|
Required:
1. Compute the predetermined rate,
based on the following:
a. direct labor cost, b. direct
labor hours, c. machine hours.
2. Using each of the methods,
compute the estimated total cost of each job at the end of the month.
3. Determine the under- or over
applied factory overhead, in total, at the end of the month under each of the
methods.
4. Which method would you recommend,
and why?
SOLUTION PREVIEW
2. Using each of the methods,
compute the estimated total cost of each job at the end of the month.
|
Total cost of jobs:
|
|||||||
|
Job
101
|
Job
102
|
Job
103
|
Job
104
|
Job
105
|
Job
106
|
Total
|
|
|
Materials
|
5,000
|
7,000
|
8,000
|
9,000
|
10,000
|
11,000
|
50,000
|
|
Direct labor
|
6,000
|
12,000
|
13,500
|
15,600
|
29,000
|
2,400
|
78,500
|
|
Total prime cost
|
11,000
|
19,000
|
21,500
|
24,600
|
39,000
|
13,400
|
128,500
|
File name: P4-10-Con-Aggie.xls File type: XLS Price: $8
