Required information Problem 3-45 Job-Order Costing; Journal Entries (LO 3-2, 3-

Question

Required information Problem 3-45 Job-Order Costing; Journal Entries (LO 3-2, 3-4, 3-5) [The following information applies to the questions displayed below.) Stellar Sound, Inc. which uses a job-order costing system, had two jobs in process at the start of 20x1: job no. 64 ($84,100) and job no. 65 ($53,400). The following information is available: a. The company applies manufacturing overhead on the basis of machine hours (based on practical capacity). Budgeted overhead and machine activity for the year were anticipated to be $824,000, and 16,000 hours, respectively. b. The company worked on four jobs during the first quarter. Direct materials used, direct labor incurred, and machine hours consumed were as follows: Direct Direct Machine Job No. Material Labor Hours $21,000 $35,000 1,200 700 44,000 65, 000 2,000 500 64 65 22,000 67 15,000 8,800 c. Manufacturing overhead during the first quarter included charges for depreciation ($32,900), indirect labor ($60,000), indirect materials used ($5,000), and other factory costs ($139,700) d. Stellar Sound completed job no. 64 and job no. 65. Job no. 65 was sold on account, producing a profit of $34,800 for the firm Problem 3-45 Part 5 5. Was manufacturing overhead under-or overapplied for the first quarter of the year? By how much? (Do not round intermediate calculations.) e overhea or the first quarter of the year

Explanation / Answer

Predetermined overhead rate = 824000/16000=51.5 Overhead applied = (1200+700+2000+500)*51.5= 226600 Actual overhead=32900+60000+5000+139700= 237600 Overhead was under-applied by $11000(237600-226600)

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