Johnson Inc. is a job-order manufacturing company that uses a predetermined over

Question

Johnson Inc. is a job-order manufacturing company that uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. For 2010, estimated direct labor-hours are 95,000, and estimated factory overhead is $617,500. The following information is for September 2010. Job A completed during September, and job B was started but not finished.
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September 1,2010, inventories
Materials inventory $ 7,500
Work in process inventory(All job A) 31,200
Finished goods inventory 67,000
Material purchases 104,000
Direct materials requisitioned
job A 65,000
job B 33,500
Direct labor-hours
job A 4,200
job B 3,500
Labor costs incurred
Direct labor($8.50/hour) 65,450
Indirect labor 13,500
Supervisory salaries 6,000
Rental costs
Factory 7,000
Administrative offices 1,800
Total equipment depreciation costs
Factory 7,500
Administrative offices 1,600
Indirect materials used 12,000
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Required
1.What is the total cost of job A?
2. What is the total factory overhead applied during Septemper?
3. What is the overapplied or underapplied overhead for September?

Explanation / Answer

1. Job A Beginning WIP 31200 Direct materials 65000 Direct labor 35700 (8.50*4200) Factory overhead 27300 (6.50*4200) Total cost: 159200 Predetermined FO rate: 617500/95000 = 6.50 b. Total applied FO during sept: Job A 27300 (6.50*4200) Job B 22750 (6.50*3500) Total Applied FO: 50050 c. Overapplied/Underapplied Actual FO Indirect Labor 13,500 Supervisory Salaries 6,000 Factory Rent 7,000 Factory depreciation 7,500 Indirect Materials used 12,000 Total actual FO: 46000 Applied FO: 50500 4500 OVERAPPLIED

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