Homework SourseTyler Tooling Company uses a job order cost system with over
Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $209,220 and total machine hours at 63,400. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job:
Job 101 was completed and sold for $50,300.
Job 102 was completed but not sold.
Job 103 is still in process.
Actual overhead costs recorded during the first month of operations totaled $16,660.
Required:
1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.)
2. Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations. (Round your intermediate calculations to 2 decimal places.)
3. Compute the balance in the Work in Process Inventory account at the end of the first month. (Round your intermediate calculations to 2 decimal places.)
4. How much gross profit would the company report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead? (Round your intermediate calculations to 2 decimal places.)
5-a. Determine the balance in the Manufacturing Overhead account at the end of the first month. (Round your intermediate calculations to 2 decimal places.)
5-b. Is it over- or underapplied?
| Job 101 | Job 102 | Job 103 | Total | |||||||||
| Direct materials used | $ | 11,500 | $ | 8,900 | $ | 4,200 | $ | 24,600 | ||||
| Direct labor | $ | 17,500 | $ | 6,300 | $ | 4,100 | $ | 27,900 | ||||
| Machine hours | 1,700 | hours | 2,700 | hours | 800 | hours | 5,200 | hours | ||||
Solution
1. The predetermined over head rate is $ 3.3 per hour
209,220 / 63400 = 3.3
2. Over head applied to the total manufacturing work in progress is $ 17,160
5,200*3.3 = 17,160
3. The balance in WIP account at the end was
Direct material. 24600
Direct labour. 27900
Manufacturing overhead 2640
Total. 55,140
4. Gross profit for first month of operation is 15,690
Explanation:
Job 101 cost
Direct material. 11500
Direct labour. 17500
Manufacturing
Overhead. 5610
Total expenditure. 34610
The job 101 is sold for 50300
Gross profit is 50300-34610 = 15,690
5 a
Actual over head incurred. 16660
Overhead applied. 17,160
Balance in manufac overhead. 500 cr balance
5b since the actual overhead is less than the over head applied. The overhead is over applied by $ 500
