Bynum Manufacturing uses a job order system and applies overhead to production o

Question

Bynum Manufacturing uses a job order system and applies overhead to production on the basis of direct labor costs. On January 1, 2012, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of January 1, Job No. 49 had been completed at a cost of $ 90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account. During the month of January, Bynum Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $ 90,000 on account. 2. Incurred factory labor costs of $65,000. Of this amount, $16,000 related to employer payroll taxes. 3. Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect labor $15,000; depreciation expense on equipment $19,000; and various others manufacturing overhead costs on account $20,000. 4. Assigned direct materials and direct labor to jobs as follows. Job No. Direct Materials Direct Labor 50 $10,000 $5,000 51 $39,000 $25,000 52 $30,000 $20,000 Instructions A. Calculate the predetermined overhead rate for 2012, assuming Bynum Manufacturing estimates total manufacturing overhead costs of $1,050,000, direct labor costs of $700,000 and direct labor hours of 20,000 for the year. B. Open job costs sheets for Jobs 50,51, and 52. Enter the January 1 balances on the job cost sheets for Job No. 50

Explanation / Answer

Hi, Please find the answer as follows: Part A: 1050000/700000 (Direct Labor Costs) = 150% Part B: Job Order 50 Cost of completed job Direct Materials: 30000 (20000 + 10000) Direct Labor: ?17000 (12000 + 5000) Manufacturing Overhead: 23500 (150% of 17000) Total Cost: 70500 Beg. Balance: Direct Material: 20000 Direct Labor: 12000 Manufacturing Oh: 16000 Job Order 51 Cost of completed job Direct Materials: 39000 Direct Labor: ?25000 Manufacturing Overhead: 37500 (150% of 25000) Total cost:101500 Job Order 52 Cost of completed job Direct Materials: 30000 Direct Labor: ?20000 Manufacturing Overhead: 30000 (150% of 20000) Total Cost: 80000 Thanks, Aman

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