Joseph Co. pulled the following information from its record for fiscal year 2015
ID: 2419446 • Letter: J
Question
Joseph Co. pulled the following information from its record for fiscal year 2015. Manufacturing overhead is allocated at a rate of 120% of Direct Labor cost. (Do not worry about closing Manufacturing overhead.) All information given and asked of you is prior to closing Manufacturing overhead.
Raw Materials Purchases (includes DM and IM)
$82,000
Direct Materials used
$94,000
Indirect Material Used
$5,000
Cost of Goods Manufactured
$204,000
Manufacturing allocated to jobs
$96,000
Cost of Goods Sold
$149,000
Indirect Labor Used
$35,000
Under-allocation of Manufacturing Overhead
$8,000
Additionally, the following general ledger balances were given:
Raw Materials Inventory as of 1/1/2015
$30,000
Work in Process as of 1/1/2015
$10,000
Finished Goods Inventory as of 12/31/2015
$60,000
Compute the following:
A. Other manufacturing overhead costs incurred during the year besides those listed above? ___________
Raw Materials Purchases (includes DM and IM)
$82,000
Direct Materials used
$94,000
Indirect Material Used
$5,000
Cost of Goods Manufactured
$204,000
Manufacturing allocated to jobs
$96,000
Cost of Goods Sold
$149,000
Indirect Labor Used
$35,000
Under-allocation of Manufacturing Overhead
$8,000
Explanation / Answer
Let x be the amount of Direct Laboue used
cost of goods manufactured = Direct materials + Direct Labour + Manufacturing overheads allocated to the job
204000 = 94000 + x + 1.2x
2.2 x = 204000 - 94000
2.2 x = 110000
x = 50000
It means that the Direct Labour cost used in the job = $50000
Hence, other manufacturing overhead costs incurred during the year besides those listed above are 120% of 50000 i.e $60000
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