ob Problem 5:(10 Points) ordev Parker er Company uses a job-order costing system

Question

ob Problem 5:(10 Points) ordev Parker er Company uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year manufacturing overhead and direct labor-hours were estimated at $50,000 and 20,000 hours, respectively, for the year. In June, Job #461 was completed. Materials costs on the job totaled $4,000 and labor costs totaled $1,500 at $5 per hour. At the end of the year,it was determined that the company worked 24,000 direct labor-hours for the year and incurred $54,000 in actual manufacturing overhead costs. Required: a. Job #461 contained 100 units. Determine the total product cost and calculate the unit product cost that would appear on the job cost sheet. b. Determine the underapplied or overapplied overhead for the year.

Explanation / Answer

Part- A, Statement Showing Job Sheet for Job#461 Parker Company Detail Cost/ Unit Total Cost Material Cost $400.00 $40,000.00 Labour Cost $15.00 $1,500.00 Manufacturing Overhead ( W/ N-1) $7.50 $750.00 Total Cost $422.50 $42,250.00 Calculation of Manufacturing Overhead Apllied on Job #461 Direct Labour Hour 300 Hour ( $1500/$5 per Hour) Overhead recovery rate/Labour hour $2.50 Manufuring Overhead applied on Job $750.00 (300Hour*$2.50) Manufactuing Overhead/Unit ($750/100 unit) $7.50 Part- B, Calculation of Underapplied/Overapplied Overhead Parker Company Detail Amount Manufacturing Overhead Estimated (A) $50,000.00 Direc Labour Hours Estimated (B) $20,000.00 Rate per direct Labour Hour ( C=A/B) $2.50 Actual Manufacturing Overhead incurred (D) $54,000.00 Actual Direct Labour Hours Worked ( E) $24,000.00 Actual Overheal applied (F=C*E) $60,000.00 Overhead Overapplied ( F-D) $6,000.00

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