Ravsten Company uses a job-order costing system The company applies overhead cos

Question

Ravsten Company uses a job-order costing system The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 42,000 machine-hours and incur $191,100 in manufacturing overhead cost. The following transactions occurred during the year a. Raw materials requisitioned for use in production, $240,000 (75% direct and 25% indirect) b. The following costs were incurred for employee services Direct labor Indirect labor Sales commissions Administrative salaries S 166,000 S 24000 S 16,000 S 31,000 c. Heat, power, and water costs incurred in the factory, $48,000 d. Insurance costs, $16,000 (85% relates to factory operations, and 15% relates to selling and administrative activities) e. Advertising costs incurred. $56,000 f. Depreciation recorded for the year, $66,000 (80% relates to factory operations, and 20% relates to selling and administrative activities) g. The company used 46,000 machine-hours during the year h. Goods that cost $486,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse i. Sales for the year totaled $712,000. The total cost to manufacture these goods according to their job cost sheets was $481 000 Required: til Detarmina tho undaranpiad or overanplied overhead for the vear (Round vour intermediate

Explanation / Answer

1..Pre-determined overhead rate = Estimate overhead/Estimated machine hours. 191100/4200 =(4.55) =4.6

Applied overhead= actual machine hours*Pre-determined overhead rate 46000*4.6 =211600

Overapplied overhead =Applied overhead - actual overhead 211600 - 198400 =13200

2 . Income statement:-

NOTE :- selling and administrative expenses   

Actual overhead Raw materials (240000*25%) 60000 Indirect labor 24000 Heat, power and water costs 48000 Insurance costs (16000*85%) 13600 Depreciation (66000*80%) 52800 Total actual overhead 198400

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.