Juarez, Inc. uses a job-order costing system for its products, which pass from t
ID: 2611722 • Letter: J
Question
Juarez, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The company applies manufacturing overhead using machine hours in the Machining Department and direct-labor cost in the Assembly Department. The following information relates to the year just ended:
Machining Department
Assembly Department
Budgeted manufacturing overhead
$4,000,000
$3,024,000
Actual manufacturing overhead
4,280,000
3,040,000
Budgeted direct-labor cost (based on practical capacity)
1,500,000
5,600,000
Actual direct-labor cost
1,450,000
5,780,000
Budgeted machine hours (based on practical capacity)
400,000
100,000
Actual machine hours
425,000
110,000
The data that follow pertain to job no. DC66, the only job in production at year-end.
Machining Department
Assembly Department
Direct material
$23,500
$ 6,800
Direct labor
$27,800
$58,600
Machine hours
360
150
Required:
1. How much overhead would have been charged to the company’s Work-in-Process account during the year?
Selling and administrative expense amounted to $2,500,000.
Juarez, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The company applies manufacturing overhead using machine hours in the Machining Department and direct-labor cost in the Assembly Department. The following information relates to the year just ended:
Explanation / Answer
Machining department predetermine overhead rate :
Predetermine overhead rate = 4000000/400000 = 10 per machine hour
Assembly department predetermine overhead rate :
Predetermine overhead rate = 3024000/5600000 = 0.54 per direct labour cost
overhead would have been charged to the company’s Work-in-Process account during the year:
Machining department (425000*10) 4250000 Assembly department (5780000*.54) 3121200 Total overhead charged to work in process account 7371200Related Questions
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