The
Pacific Manufacturing Company operates a job-order costing system and applies
overhead cost to jobs on the basis of direct labor cost.
P3-24
The Pacific Manufacturing Company operates a job-order costing system and applies
overhead cost to jobs on the basis of direct labor cost. Its predetermined
overhead rate was based on a cost formula that estimated $126,000 of manufacturing overhead for an estimated allocation base of
$84,000 direct labor dollars.
The
company has provided the following data.
Beginning Ending
Raw
Materials $21,000
$16,000
Work
in Process $44,000 $40,000
Finished
Goods $68,000 $60,000
The
following actual costs were incurred during the year:
Purchase
of raw materials (all direct) $133,000
Direct
labor cost $80,000
Manufacturing overhead costs:
Insurance,
factory $7,000
Depreciation
of equipment $18,000
Indirect
labor $42,000
Property
taxes $9,000
Maintenance
$11,000
Rent,
building $36,000
Required:
1-a.
Compute the predetermined overhead rate for the year.
1-b.
Compute the amount of underapplied or overapplied overhead for the year.
2.
Prepare a schedule of cost of goods manufactured for the
year. Assume all raw materials are used in production as
direct materials.
3-a.
Compute the unadjusted cost of goods sold for the year. (Do not include any
under applied or over applied overhead
in your cost of goods sold figure.)
3-b.
Identify the options available for disposing of underapplied or overapplied
overhead? (You may select more than one answer.
4.
Job 137 was started and completed during the year. What price would have been
charged to the customer if the job required $3,200 in materials and $4,200 in
direct labor cost, and the company priced its jobs at 40%
above the job’s cost according to the accounting system?
5.
Direct labor made up $8,000 of the $40,000 ending Work in Process inventory
balance. Supply the information missing below
Direct
materials $
Direct
labor 8,000
Manufacturing overhead
Work
in process inventory $40,000
SOLUTION
PREVIEW
Pacific
Manufacturing Company
Computations
1a.
|
Estimated total manufacturing
overhead cost
|
$ 126,000
|
|
Estimated total amount of the
allocation base
|
$
84,000
|
|
Predetermined overhead rate
|
150%
|
|
|
Correct!
|
File
name: P3-24-The-Pacific-Manufacturing.xls
File type: XLS Price: $8
