Bates Manufacturing uses a job order cost system, and overhead is applied on the
ID: 2474685 • Letter: B
Question
Bates Manufacturing uses a job order cost system, and overhead is applied on the basis of direct labor hours. At the beginning of the period, the company estimated that overhead would be $64,000 and 10,000 direct labor hours would be worked. Two projects were started and completed in the current accounting period. The following transactions were completed during the period:
(a) Used $10,000 of direct material on Project I and $6,800 of direct material on Project II.
(b) Labor costs for the two jobs amounted to the following: Project I, $24,000 (2,000 hours); Project II, $44,000 (6,000 hours).
(c) Project II was sold during the period for $120,000.
The company's gross margin for the period was (Do not round your intermediate calculation):
A. $30,800.
B. $89,200.
C. $69,200.
D. $18,000
2. Lewes Company produced 8,000 units of inventory and sold 6,000. The company incurred the following production costs:
Variable manufacturing cost: $12.00 per unit
Fixed manufacturing overhead cost: $60,000
Assuming the company sells its product at a price of $25 per unit, and incurred $10,000 in selling and administrative cost, what is the amount of net income under variable costing?
A. $8,000
B. $23,000
C. $68,000
D. $107,000
3. Herald Company paid $2,800 cash for production supplies. The recognition of this event will:
A. decrease equity.
B. not impact total assets.
C. increase expenses.
D. None of these.
Explanation / Answer
Ans1) 'A' $30,800
Ans2) 'A' $8,000
Ans3) 'D' None of these
Project I Project II Direct Material 10,000 6,800 Direct Labour 24,000 44,000 Overhead allocated 12,800 38,400 46,800 89,200 Sales revenue - 120,000 Net income 30,800 Direct labour hours 2,000 6,000 Overhead 64,000 Direct labour 10,000 Overhead per unit 6.40Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.