Babb Company is a manufacturing firm that uses job-order costing. The company ap
ID: 2331339 • Letter: B
Question
Babb Company is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 17,000 machine-hours and incur $272,000 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased, $416,000 b. Raw materials were requisitioned for use in production, $412,000 $(350,000 direct and $62,000 indirect). c. The following employee costs were incurred: direct labor, $330,000; indirect labor, $69,000; and administrative salaries, $157,000 d. Selling costs, $113,000. e. Factory utility costs, $29,000. f. Depreciation for the year was $121,000 of which $114.000 is related to factory operations and $7.000 is related to selling. general, and administrative activities. g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 15,000 machine-hours h. Sales for the year totaled $1,282,000Explanation / Answer
The Correct answer is d.
The Material issued to the Production is recorded to the Work in Process and the Indirect Material Issued is recorded as Manufacturing Overhead.
The total manufactring overhead at the end of the period will be applied to the work in process as per the recovery rate and under recovery/ Over Recovery will be recorded.
Dear Student,
Best effort has been made to give quality and correct answer. But if you find any issues please comment your concern. I will definitely resolve your query.
Particulars Debit Credit Work in process $ 350,000 Manufacturing Overhead $ 62,000 Raw Material $ 412,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.