Kansas Company uses a job costing accounting system for its production costs. Th
ID: 2407024 • Letter: K
Question
Kansas Company uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. The company prepared an estimate of overhead costs at different volumes for the current year as follows:
The expected volume is 180,000 direct labor-hours for the entire year. The following information is for March, when Jobs 6023 and 6024 were completed:
(Note: Regardless of your answer to requirement a, assume that the predetermined overhead rate is $8 per direct labor-hour. Use this amount in answering requirements b through e.)
Required:
a. Compute the predetermined overhead rate (combined fixed and variable) to be used to apply overhead to individual jobs during the year. (Round your answer to 2 decimal places.)
b. Compute the total cost of Job 6023 when it is finished.
c. How much of factory overhead cost was applied to Job 6025 during March?
d. What total amount of overhead was applied to jobs during March?
e. Compute actual factory overhead incurred during March.
f. At the end of the year, Kansas Company had the following account balances:
Assuming that the overapplied overhead is not material, show the new account balances in the following table.
Direct labor-hours 150,000 180,000 210,000 Variable overhead costs $ 1,050,000 $ 1,260,000 $ 1,470,000 Fixed overhead costs 684,000 684,000 684,000 Total overhead $ 1,734,000 $ 1,944,000 $ 2,154,000
Explanation / Answer
a. Predetermined overhead rate = Estimated overhead costs/Estimated direct labor hours = $1944000/180000 = $10.80 per direct labor hour
b.
c. Factory overhead cost applied to Job 6025 during March: 5500 DLH x $8 = $44000
d. Total amount of overhead applied to jobs during March: (11500 + 9500 + 5500) DLH x $8 = 26500 DLH x $8 = $212000
e. Actual factory overhead incurred during March: $227000
f.
Since the overapplied overhead is not material, the same is adjusted to the cost of goods sold.
Job 6023 Beginning balance 160000 Direct materials 130000 Direct labor (11500 x $8) 92000 Factory overheads (11500 x $8) 92000 Total cost $ 474000Related Questions
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