Reference no: EM132841828
Problem - Custom Job Inc (CJI) started using a job-order costing system using on a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000. The following information pertains to March of the current year:
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Job A
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Job B
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Job C
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Total
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Work-in-Process Inventory, Mar 1
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$16,000
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26,000
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38,000
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80,000
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During the month
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Materials Used
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$4,000
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4,800
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7,200
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16,000
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Direct Labor
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$2,400
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3,600
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4,000
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10,000
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Machine Hours
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Mhr 400
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700
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900
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2,000
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Labor Hours
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Lhr 120
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180
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200
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500
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Actual manufacturing overhead cost incurred in November was $61,000. At the end of the month Jobs A & C were completed. Assume Job A has already been delivered to customers.
Required -
1. Compute the predetermined overhead application rate.
2. Determine the total cost associated with each job?
3. Calculate the ending Work-in-Process Inventory.
4. If Job A's revenue was $50,000 cash, calculate the gross profit.
5. Assuming no beginning Finished Goods Inventory calculate the cost of ending Finished Goods Inventory.
6. How much was overhead overapplied or underapplied? How do we account for the difference?