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Problem: Job Order Costing - Redro Limited
Redro Ltd. is a custom manufacturer and uses a job order costing system. Information relating to production for the month of August is as follows:Job orders completed $400,000Cost of job orders shipped to customers $360,000Selling price cost + 25%Direct materials issued $110,000Beginning W-I-P $85,000Direct labour $180,000Direct labour hours 12,000Actual manufacturing overhead $129,000Beginning finished goods 0Manufacturing overhead is applied based on direct labour hours. The manufacturing overheadrate is calculated at the beginning of the year. Estimated yearly manufacturing overhead is$2,400,000, and budgeted labour hours are 240,000.
Required:
1. What is the balance in W-I-P with respect to applied overhead at the end of August?
2. What is the under- or over- applied overhead for the month of August (assume no under-or over- applied balance carried forward)?
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