Fill in the blanks for the following:
(1) The total cost of the direct materials, direct labor, and factory overhead applied in the
December 31 goods in process inventory is $_______________________.
(2) The company’s overhead application rate is __________________%
(3) Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had $________
of direct materials cost.
(4) Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had
$________ of factory overhead cost.
135. The overhead allocation rate in Frantz Company’s job order cost accounting system
applies overhead based on direct labor costs. The company’s manufacturing costs for the
current year were: direct materials, $108,000; direct labor, $144,000; and factory overhead,
$18,000. At year-end, the total cost of goods in process is $36,000, which includes $12,000 of
direct labor cost. What amount of direct material cost is included in the ending goods in
process inventory?
19–68
136. Medlar Corp. maintains a Web-based general ledger. Overhead is applied on the basis of
direct labor costs. Its bookkeeper accidentally deleted most of the entries that had been
recorded for January. A printout of the general ledger (in T-account form) showed the
following:
Raw Materials Inventory Goods in Process Inventory
Ba1.1/1 10,000 Bal 1/1 4,000 f)
a) b) c)
d)
e)
17,500 g)
Accounts Payable Finished Goods Inventory
h) Bal. 1/1 5,000 i) I)
i) k)
Bal. 1/31 9,000 Bal. 1/31 15,000
Factory Overhead Cost of Goods Sold
m) n) o)
A review of the prior year’s financial statements, the current year’s budget, and January’s
source documents produced the following information:
(1) Accounts Payable is used for raw material purchases only. January purchases were
$49,000.
(2) Factory overhead costs for January were $17,000 none of which is indirect materials.
(3) The January 1 balance for finished goods inventory was $10,000.
(4) There was a single job in process at January 31 with a cost of $2,000 for direct materials
and $1,500 for direct labor.
(5) Total cost of goods manufactured for January was $90,000.
(6) All direct laborers earn the same rate ($13/hour). During January, 2,500 direct labor hours
were worked.
(7) The predetermined overhead allocation rate is based on direct labor costs. Budgeted
(expected) overhead for the year is $195,000 and budgeted (expected) direct labor is
$390,000.
Fill in the missing amounts a through o above in the T-accounts above.
19–70
137. Selwyn’s Service applied overhead on the basis of direct labor costs during the current
year. Overhead applied was $16,500. Actual overhead incurred was $17,200.
(a) Prepare a journal entry to remove this difference assuming that it is not material.
(b) Instead, assume actual overhead incurred was only $24,000. Describe (without
computations) the alternative procedure that Selwyn might use to record this material
difference.
138. Dina Corp. uses a job order cost accounting system. Four jobs were started during the
current year. The following is a record of the costs incurred:
Job # Material
Used Direct Labor
Used Direct Labor
Hours Used
1010 $45,000 $72,000 8,000
1011 59,000 77,000 7,000
1012 35,000 30,000 3,000
1013 26,000 40,000 5,000
Actual overhead costs were $55,800. The predetermined overhead allocation rate is $2.40 per
direct labor hour. During the year, Jobs 1010, 1012, and 1013 were completed. Also, Jobs
1010 and 1013 were sold for $387,000. Assuming that this is Dina’s first year of operations:
(a) Make the necessary journal entries to charge the costs to the jobs started and to record the
completion and sale of finished jobs.
(b) Calculate the balance in the Goods in Process Inventory, Finished Goods Inventory, and
Factory Overhead accounts. Does the Factory Overhead account balance indicate an over- or
underapplied overhead?
19–72
139. The following information is available for the Millennium Corporation for the current
year:
Cost of goods sold ………………………….. $292,000
Depreciation of factory equipment …………. 25,200
Direct labor …………………..……………… 64,750
Finished goods inventory, Beginning–year …. 45,000
Factory insurance …………………………… 11,200
Factory utilities ……………………………… 16,800
Goods transferred from Goods in Process
Inventory to Finished Goods Inventory …… 285,150
Indirect labor ………………………………… 8,400
Raw materials inventory, Beginning–year……. 4,200
Raw materials purchased ……………………. 116,200
Raw materials used in production
(includes $7,000 of indirect materials) …….. 121,800
Rent on factory building ……………………... 22,400
Millennium Corporation uses a predetermined overhead rate of 150% of direct labor cost.
Prepare journal entries for the following transactions and events:
(a) Purchase of raw materials on account.
(b) Assignment of materials costs to Goods in Process Inventory and Factory Overhead.
(c) Payment of Factory Payroll in cash.
(d) Assignment of Factory Payroll to Goods in Process Inventory and Factory Overhead.
(e) Recording of other factory overhead. Assume that all items other than depreciation are
paid in cash.
(f) Assignment of Factory Overhead to Goods in Process Inventory.
(g) Transfer of goods completed to Finished Goods Inventory.
(h) Recording cost of goods sold.
(i) Assignment of over- or underapplied overhead to Cost of Goods Sold.
19–74
140. A company’s predetermined overhead allocation rate is 130% based on direct labor cost.
How much overhead would be allocated to Job No. 105 if it required total direct labor costs of
$60,000?
141. Selected information from the budget of the Khalid Corp. at the beginning of the year
follows:
Estimated factory overhead $132,000
Estimated direct labor hours 55,000 hours
Estimated machine hours……… 41,250 hours
Estimated direct labor cost $825,000
Actual factory overhead
incurred during the year $144,000
19–75
Calculate the predetermined overhead allocation rate if the company uses the following as a
basis:
(a) Direct labor hours.
(b) Direct labor cost.
(c) Machine hours.
142. A manufacturing company uses an overhead allocation rate based on direct labor cost.
The company’s Goods in Process Inventory account has a $15,000 debit balance after all
posting is completed, and the cost sheet of the one job still in process shows direct material
costs of $6,600 and direct labor costs of $3,000. What is the company’s overhead application
rate?
143. Bean Company uses a job order cost system and last period incurred $70,000 of
overhead and $100,000 of direct labor. Bean estimates that its overhead next period will be
$65,000. The company also expects to incur $100,000 of direct labor. If Bean bases its
overhead applied on direct labor cost, what should be the overhead allocation rate for the next
period?
19–76
144. A company’s job order cost accounting system applies overhead based on direct labor
cost. The company’s estimated production costs for were: direct labor, $57,600; direct
materials, $76,800; and factory overhead, $9,600. Calculate the company’s overhead
allocation rate.
145. The job cost sheet for Job number 93-471 includes the following information:
DIRECT MATERIALS:
7/12 Requisition R93-566: 20 units @ $ 3.50 per unit
7/13 Requisition R93-576: 18 units @ $ 5.00 per unit
7/13 Requisition R93-578: 4 units @ $25.00 per unit
7/14 Requisition R93-591: 40 units @ $ 1.25 per unit
DIRECT LABOR:
7/12 Employee 19: 8 hours @ $ 9.00 per hour
7/13 Employee 19: 6 hours @ $ 9.00 per hour
7/13 Employee 37: 6 hours @ $ 7.00 per hour
7/14 Employee 19: 5 hours @ $ 9.00 per hour
7/14 Employee 92: 5 hours @ $11.00 per hour
FACTORY OVERHEAD: Assigned at 150% of direct labor cost.
19–77
What is the total cost of Job number 93-471?
146. The following calendar year information about the Tahoma Corporation is available on
December 31:
Advertising expense…………………………… $ 28,800
Depreciation of factory equipment…………… 42,320
Depreciation of office equipment…………….. 10,800
Direct labor…………………………………… 142,600
Factory utilities………………………………… 35,650
Interest expense………………………………… 6,650
Inventories, January 1:
Raw materials…………………………… 3,450
Goods in process………………………… 17,250
19–78
Finished goods…………………………... 35,600
Inventories, December 31:
Raw materials…………………………….. 2,300
Goods in process………………………….. 20,700
Finished goods…………………………… 31,050
Raw materials purchases……………………… 132,450
Rent on factory building……………………… 41,400
Indirect labor………………………………….. 51,750
Sales commissions…………………………….. 16,500
The company applies overhead on the basis of 125% of direct labor costs. Calculate the
amount of over- or underapplied overhead.
147. The predetermined overhead allocation rate for Forsythe, Inc., is based on estimated
direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs
incurred were:
Direct materials…………………………….. $250,000
Direct labor………………………………….. 410,000
Indirect materials…………………………… 55,000
Indirect labor……………………………….. 125,000
Sales commissions…………………………. 50,000
Factory depreciation………………………… 170,000
Property taxes, factory……………………... 15,000
Factory utilities…………………………….. 35,000
Advertising………………………………….. 62,500