Problem 7-45 Analysis of Overhead Using a Predetermined Rate (LO 7-3) Kansas Company uses a job cost
Problem 7-45 Analysis of Overhead Using a Predetermined Rate (LO 7-3) Kansas Company uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. The company prepared an estimate of overhead costs at different volumes for the current year as follows: Direct labor-hours Variable overhead costs Fixed overhead costs Total overhead 150,000 $1,050,000 594,000 $1,644,000 180,000 $1,260,000 594,000 $1,854,000 210,000 $1,470,000 594,000 $2,064,000 The expected volume is 180,000 direct labor-hours for the entire year. The following information is for March, when Jobs 6023 and 6024 were completed: $ 32,000 $ 167,000 $ 337,000 Inventories, March 1 Materials and supplies Work-in-process (Job 6023) Finished goods Purchases of materials and supplies Materials Supplies Materials and supplies requisitioned for production Job 6023 Job 6024 Job 6025 Supplies $ 401,000 $ 49,000 $ 136,000 105,000 75,000 17,000 $ 333,000 Factory direct labor-hours (DLH) Job 6023 Job 6024 Job 6025 10,000 DLH 9,500 DLH 6,000 DLH $ 204,000 58,500 105,000 Labor costs Direct labor wages (all hours @ $8) Indirect labor wages (13,000 hours) Supervisory salaries Building occupancy costs (heat, light, depreciation, etc.) Factory facilities Sales and administrative offices Factory equipment costs Power Repairs and maintenance Other $ 19,500 7,500 12,000 5,500 7,500 25,000 $ (Note: Regardless of your answer to requirement a, assume that the predetermined overhead rate is $9 per direct labor-hour. Use this amount in answering requirements b through e.) Required: a. Compute the predetermined overhead rate (combined fixed and variable) to be used to apply overhead to individual jobs during the year. (Round your answer to 2 decimal places.) Predetermined overhead rate per DLH b. Compute the total cost of Job 6023 when it is finished. The total cost of Job 6023 c. How much of factory overhead cost was applied to Job 6025 during March? Factory overhead cost of Job 6025 d. What total amount of overhead was applied to jobs during March? Total amount of overhead e. Compute actual factory overhead incurred during March. Actual factory overhead incurred We were unable to transcribe this image
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