Exercise 4-15 (continued)
2 a. Molding Department:
The estimated total manufacturing overhead cost in the Molding
Department is computed as follows:
Estimated fixed manufacturing overhead ………………
$800,000
Estimated variable manufacturing overhead
$5.00 per MH × 20,000 MHs …………………………...
100,000
Estimated total manufacturing overhead cost …………
$900,000
MHs
per MH
Estimated fixed manufacturing overhead ………………
Estimated total manufacturing overhead cost …………
$450,000
MHs
per MH
Problem 4-16 (continued)
We can now complete the job cost sheet for the Krimmer Corporation
Problem 4-17 (continued)
Durham Company
Income Statement
For the Year Ended December 31
Sales …………………………….……………
$200,000
Cost of goods sold …………………………
124,000
Gross margin ………………………………..
76,000
Selling and administrative expenses …..
61,000
Net operating income …………………….
$ 15,000
Problem 4-19 (45 minutes)
1. The actual manufacturing overhead costs incurred were as follows:
Reference
(a)
Indirect materials ……………………………..
$ 38,000
(b)
Indirect labor …………………………………..
18,000
(c)
Factory heat, power, and water ……………
42,000
(d)
Factory insurance ……………………………..
9,000
(f)
Factory depreciation ………………………….
51,000
Total manufacturing overhead incurred …
$158,000
In contrast, $170,000 in manufacturing overhead cost was applied to
jobs:
$153,000 =$4.25 per MH; 40,000 MHs×$4.25 per MH=$170,000.
36,000 MHs
Therefore, the overhead was overapplied by $3,000.
Manufacturing overhead incurred ………..
$158,000
Manufacturing overhead applied
(40,000 MHs × $4.25 per MH) ………….
170,000
Overhead overapplied ……………………….
$ 12,000
2. The cost of goods sold for the year (before adjustment for underapplied
or overapplied overhead) is $475,000—the total cost to manufacture the
goods that were sold according to their job cost sheets. The adjusted
cost of goods sold is computed as follows:
Unadjusted cost of goods sold ………………….
$475,000
Deduct: Overapplied overhead ..………………..
12,000
Cost of goods sold ………………………………….
$463,000
The selling and administrative expenses for the year were:
Reference
(b)
Sales commissions …………………………….
$ 10,000
(b)
Administrative salaries ……………………….
25,000
(d)
Insurance ……………………………………….
1,000
(e)
Advertising ………………………………………
50,000
(f)
Depreciation ……………………………………
9,000
Total selling and administrative expense ..
$95,000
