Manufacturing cost data for Orlando Company which uses a job

Manufacturing cost data for Orlando Company, which uses a job order cost system, are presented below.

Case A

Case B

Case C

Direct materials used

$(a)

$83,000

$63,150

Direct labor

50,000

140,000

(h)

Manufacturing overhead applied

42,500

(d)

(i)

Total manufacturing costs

145,650

(e)

213,000

Work in process 1/1/17

(b)

15,500

18,000

Total cost of work in process

201,500

(f)

(j)

Work in process 12/31/17

(c)

11,800

(k)

Cost of goods manufactured

192,300

(g)

222,000

Instructions

Indicate the missing amount for each letter. Assume that in all cases manufacturing overhead is applied on the basis of direct labor cost and the rate is the same.

Solution

Direct material used+Direct labor+Manufacturing overhead=Total manufacturing cost

Total manufacturing cost+Beginning WIP=Total cost of WIP

Total cost of WIP-Ending WIP=Cost of goods manufactured

Predetermined manufacturing overhead rate=($42500/$50000)=85%of direct labor cost

For case C:

Direct labor+manufacturing overhead=(213000-63150)

Direct labor+0.85direct labor=149850

Hence direct labor=149850/1.85

=$81000

Hence manufacturing overhead=(81000*85%)=$68850.