oT Color, a company selling customized garments for niche customers Use the foll

Question

oT Color, a company selling customized garments for niche customers Use the following to answer questions 8,9, 10 and 11 The Disc Co 2017: mpany uses a job order cost system. The following relate to the 4 jobs in Direct materials issued to production $7,000 S10,000 $10,200 $2,800 labor co $4,500 $8.700 $6,600 $2,200 Direct a Job#1 Job #2 Job #3 Job #4 in Additional information: a. Manuf acture overhead is applied to production costs on the basis of 150% ofdirect labor costs. b. Total manufacture overhead incurred was $30,000. C. Jobs #1, #2, and #3 were completed during the year. d. Jobs #1 and #2 were sold for S60.000 (selling price) and delivered to customers. e. The company allocates any over- or underapplied overhead to work in process, finished goods, and cost of goods sold based on their total overhead applied. 8. The cost of goods manufactured for the year 2017 is $76,700 C) $77,500 D) $85,000 9. The amount of overapplied or underapplied overhead to be allocated to finished goods is A) S300 B) $900 C) $2,700 35-3 $3,000 10. The ending balance of work-in-process inventory to be reported on Balance Sheet is: $8,000 60 D) SO 11. The cost of goods sold to be reported on Income Statement is: A) $48,200 B) $50,000 $51,800 D) $60,000

Explanation / Answer

1. job #1 , #2 and #3 are completed in year 2017.

cost of goods manufactured in 2017:

  

so, option (a) 76700 is correct.

2. The amount of over applied overhead = manufacturing overhead applied - actual manufacturing overhead

= total direct labour cost *150% - 30000

= (4500+8700+6600+2200)*150% - 30000

= 33000 - 30000

= $ 3000

so, option (d) $3000 is correct.

3.ending balance of work in process:( job #4)

so, option (b) 8300 is correct.

4. cost of goods sold: (job #1 , job #2)

  

so, option (b) is correct.

direct material (7000+10000+10200) 27200 direct labour 19800 manufacturing overhead (150% * 19800) 29700 TOTAL $76700

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