The Ilarion Manufacturing Company operates a job-order costing system and applie

Question

The Ilarion Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $137,200 of manufacturing overhead for an estimated allocation base of $98,000 direct labor dollars. The company has provided the following data.

Compute the predetermined overhead rate for the year.

Compute the amount of underapplied or overapplied overhead for the year.

Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.

Compute the unadjusted cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.)

Job 453 was started and completed during the year. What price would have been charged to the customer if the job required $5,200 in materials and $6,800 in direct labor cost, and the company priced its jobs at 30% above the job’s cost according to the accounting system?

Direct labor made up $10,600 of the $45,500 ending Work in Process inventory balance. Supply the information missing below:

The Ilarion Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $137,200 of manufacturing overhead for an estimated allocation base of $98,000 direct labor dollars. The company has provided the following data.

Explanation / Answer

Answer 1a Predetermined overhead rate for the year = (Estimated manufacturing overhead / Estimated direct labour cost] * 100 Predetermined overhead rate for the year = (137200 / 98000] * 100 = 140% of direct labour cost Answer 1b Actual manufacturing overhead Factory Insurance $10,700 Depreciation of equipment $18,900 Indirect labor $34,600 Property taxes $10,400 Maintenance $22,500 Rent, building $45,500 Total $1,42,600 Applied manufacturing overhead = 140% of direct labour cost = 140% *$95000 = $133000 Underapplied overhead for the year = $142600 - $133000 = $9600 Answer 2 Calculation of cost of goods manufactured Direct Material consumed Beginning Inventory $48,000 (+) Purchases during the year $1,49,000 (-) Ending inventory $20,500 Raw material consumed $1,76,500 Direct Labour cost $95,000 Manufacturing overheads applied $1,33,000 Cost of production $4,04,500 (+) Beginning WIP $64,000 (-) Ending WIP $45,500 Cost of goods manufactured $4,23,000 Answer 3 Calculation of unadjusted cost of goods sold Cost of goods manufactured $4,23,000 (+) Beginning Finished goods $90,000 (-) Ending Finished Goods $70,500 Cost of goods sold $4,42,500 Answer 4 Price charged to customer for Job 453 Direct Material $5,200 Direct labour $6,800 Manufacturing overhead (140% of direct labour cost) $9,520 Total Cost $21,520 (+) Margin - 30% of cost $6,456 Price for Job 453 $27,976 Answer 5 Direct Labour $10,600 Manufacturing overhead (140% of direct labour cost) $14,840 Direct Material $20,060 Total cost of ending work in process $45,500

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