Exercise 4-16 Z Church Furniture manufactures custom pews, altars, and pulpits f

Question

Exercise 4-16 Z Church Furniture manufactures custom pews, altars, and pulpits for churches across the southern United States. Since each order is unique, JZ uses a job order costing system. During the month of June, JZ worked on orders for three churches: Faith Church, Grace Church, and Hope Church. Production on the Faith and Grace orders began in May and ended in June. Production on the Hope rder began in June and was incomplete at te end of the month. JZ applies overhead to each job based on machine hours. Prior to the year, managers had estimated manufacturing overhead at $800,000, along with 40,000 machine hours. Additional cost information related to the three orders is as follows: Beginning balance, June 1 Direct materials, June Direct labor, June Manufacturing OH, June Machine hours, June Faith Grace Hope $3,000 $2,300 - $4,000 $7,000 $2,250 $2,000 $3,100 $1,300 4,000 5,200 2,225 What is Jz's predetermined overhead rate? Predetermined overhead rate 20 / machine hour How much manufacturing overhead should JZ apply to each job for June? Manufacturing over Faith 80000 104000 44500 Grace Hope What is the balance in JZ's Work in Process Inventory account at the end of June? Balance in work in process inventory account

Explanation / Answer

a) Predetermine overhead rate = 800000/40000 = 20 per machine hour

b) Manufacturing overhead applied :

c) Balance in work in process inventory account at the end of june :

Manufacturing overhead Faith 80000 Grace 104000 Hope 44500

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