JOB ORDER COSTING The following cost data relate to the manufacture activities o
ID: 2405040 • Letter: J
Question
JOB ORDER COSTING
The following cost data relate to the manufacture activities of the Aquarius Company during 2018:
Manufacturing overhead costs incurred during the year:
Property taxes $1,500
Utilities, factory 2,500
Indirect labor 5,000
Depreciation, factory 12,000
Insurance, factory 3,000
Total actual costs $24,000
Other costs incurred during the year:
Purchases of raw materials $16,000
Direct labor cost 20,000
Inventories:
Raw materials, January 1, 2018 $ 4,000
Raw materials, December 31, 2018 $ 3,500
Work in Process, January 1, 2018 $ 3,000
Work in process, December 31, 2018 $ 3,750
The company uses a predetermined overhead rate to charge overhead cost to production. The rate for 2018 was $ 5.00 per machine hour, a total of 5,000 machine hours were used for the year.
REQUIRED:
1. Compute the amount of under or over applied overhead cost for the year 2018.
2. Prepare a schedule of cost of goods manufactured for 2018.
Explanation / Answer
1) Overhead applied = 5000*$5 = 25000 Actual overhead 24000 Overhead overapplied = 25000-24000 = 1000 2) SCHEDULE OF COST OF GOODS MANUFACTURED WIP, January 1, 2018 3000 Direct material cost: Beginning balance of raw materials 4000 Add: Purchases 16000 Total raw materials available 20000 Less: Ending balance of raw materials 3500 Direct materials cost 16500 Direct labor cost 20000 Overhead applied = 5000*$5 = 25000 Total cost 64500 Less: WIP, December 31. 2018 3750 Cost of goods manufactured 60750
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