Chapter 04 – Job Costing
4-41 Plantwide vs. Departmental Overhead Rate (30 min)
1. Budgeted Overhead = ($150,000 + $94,000) + ($80,000 + $163,000)
= $487,000
Budgeted Direct Labor-hours = 1,000 units x (15 + 10) hours
2. Budgeted Machine-hours = 1,000 units x (5 + 15) hours = 20,000 hours
Predetermined Overhead Rate = $487,000 ÷ 20,000
3. Using Direct Labor-hours:
Department A Department B Total
DL-hours 1,000 x 15 1,000 x 10
= 15,000 hours = 10,000 hours 25,000 hours
Overhead applied
15,000 x $19.48 10,000 x $19.48
= $292,200 = $194,800 $487,000
Using Machine-hours:
4. If direct labor-hours are used to apply factory overhead, Department A
is assigned more than its total estimated overhead and Department B is
assigned less. Therefore, Department A will assign more overhead to
products than if a departmental rate were used and Department B will
Chapter 04 – Job Costing
4-41 (continued -1)
5. Using direct labor-hours for Department A:
Predetermined Overhead Rate = $244,000 ÷ 15,000
= $16.267 per direct labor-hour (rounded)
Applied Overhead = 1,000 units x 15 hours x $16.27 = $244,000 (rounded)
Using machine-hours for Department B:
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Education.
Chapter 04 – Job Costing
4-42 Application of Overhead (25 min)
4-23
Education.
Chapter 04 – Job Costing
4-43 Cost Flows; Application of Overhead (40 min)
1. Predetermined Overhead Rate
= $455,600 ÷ 33,500 = $13.60 per direct labor hour
2. a. Factory Overhead 1,800
Prepaid Insurance 1,800
b. Selling& Administrative Expense 1,025
Accumulated Depreciation 1,025
e. Work-in-Process Inventory 140,000
Factory Overhead 20,000
Cash 160,000
f. Factory Overhead 6,270
Cash 6,270
g. Materials Inventory 24,500
Accounts Payable 24,500
i. Selling & Administrative Expense 5,660
Cash 5,660
j. Factory Overhead 3,505
Accumulated Depreciation 3,505
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Education.
Chapter 04 – Job Costing
4-43 (continued -1)
k. Advertising Expense 2,650
Cash 2,650
l. – Direct labor hours = 4,000 total hours – 1,000 indirect labor hours
– Applied Overhead = $13.60 x 3,000 direct labor hours = $40,800
Work-in-Process Inventory 40,800
Factory Overhead 40,800
m. Finished Goods Inventory 64,000
Work-in-Process Inventory 64,000
3. Actual Overhead = $1,800(a) + $6,510(d) + $20,000(e) + $6,270(f) +
$1,600(h) + $3,505(j) = $39,685
Overapplied Overhead = $40,800 – $39,685 = $1,115
Decrease Cost of Goods Sold
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Education.
Chapter 04 – Job Costing
4-43 (continued -2)
4.,5.
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Chapter 04 – Job Costing
4-44 Application of Overhead (30 min)
Note: the information in part (a) is not needed for the solution.
1. Total manufacturing cost: Job X = $83,600; Job Y = $75,800
2. Underapplied overhead: $3,100; increase Cost of Goods Sold
See calculations below:
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Chapter 04 – Job Costing
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Education.
Chapter 04 – Job Costing
4-45 Application of Overhead (20 min)
1. Total manufacturing cost: Job S = $358,437.50; Job T= $332,937.50
2. Overapplied overhead: $22,875; decrease Cost of Goods Sold
See calculations below:
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Chapter 04 – Job Costing
4-46 Cost Flows, Application of Overhead (50-60 min)
1. Predetermined Overhead Rate
= $1,261,500 ÷ 87,000 = $14.50 per direct labor-hour
2. a. Materials Inventory 130,000
Accounts Payable 130,000
$26 x 5,000 = $125,000
b. Materials Inventory 1,800
Accounts Payable 1,800
$36 x 50 = $1,800
(note that indirect materials are included in material inventory)
c. Work-in-Process Inventory 91,000
Factory Overhead 1,116
Materials Inventory (direct materials) 91,000
Materials Inventory (indirect materials) 1,116
$26 x 3,500 = $91,000
$36 x 31 = $1,116
f. Factory Overhead 3,500
Prepaid Insurance 3,500
g. Factory Overhead 8,500
Accumulated Depreciation 8,500
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