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5. Irma Corporation uses a job-order costing system and applies manufacturing overhead to jobs using a
predetermined overhead rate based on direct labor-hours. Last year manufacturing overhead and direct
labor-hours were estimated at $84,000 and 24,000 hours, respectively, for the year. In June, Job #168 was
completed. Materials costs on the job totaled $6,000 and labor costs totaled $3,600 at $6.00 per hour. At
the end of the year, it was determined that the company worked 32,000 direct labor-hours for the year and
incurred $100,600 in actual manufacturing overhead costs.
Required:
A) Job #168 contained 50 units. Determine the unit product cost that would appear on the job cost sheet.
(Total job cost: $11,700. Unit Product Cost is: $234)
B) What was the total applied overhead for the year? Was it under-applied or over-applied? (Total
Applied Overhead: $112,000. Over-applied by $11,400)
C) Irma has a policy to close out the under-applied or over-applied overhead to Cost of Goods Sold. If
the COGS for the year before the overhead adjustment was $256,000, what would be the COGS after
the adjustment of the over- or under-applied overhead? ($244,600)
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