Tyler Tooling Company uses a job order cost system with overhead applied to prod
ID: 2338931 • Letter: T
Question
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 tota manufacturing overhead cost at $420,000 and total machine hours at 60,000. 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 103 $9,600 $ 9,600 Job 101 Job 102 Total Direct materials used Direct labor Machine hours S 19,200 S 28,800 S 14,400 S 11,200 S 43,200 $ 49,600 1,000 hours 4,000 hours 2,000 hours 7,000 hours Job 101 was completed and sold for $60,000 Job 102 was completed but not sold Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $45,000 Required 1. Calculate the predetermined overhead rate Predetermined Overhead Rate per machine hour 2. Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations. Total Applied Manufacturing Overhead 3. Compute the balance in the Work in Process Inventory account at the end of the first month.Explanation / Answer
Answer
A
Manufacturing Overhead
$ 420,000.00
B
Total machine hours
60,000
C = A/B
Predetermined Overhead rate
$ 7.00
A
Total Machine hours worked
7,000
B
Predetermined Overhead rate
$ 7.00
C = A x B
Manufacturing Overhead applied
$ 49,000.00
Only Job 103 is still in process, hence WIP inventory balance = Balance of Job 103 cost
Working
Job 103
Beginning WIP
$ -
Direct Material Added
$ 9,600.00
Direct Labor
$ 9,600.00
Applied manufacturing Overhead [see working]
$ 14,000.00 [2000 hours x $7]
Total Cost
$ 33,200.00
Answer: $ 33,200
A
Manufacturing Overhead
$ 420,000.00
B
Total machine hours
60,000
C = A/B
Predetermined Overhead rate
$ 7.00
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