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The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor

The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $126,000 of manufacturing overhead for an estimated allocation base of $84,000 direct labor dollars. The company has provided the following data.

                                                Beginning            Ending

  Raw Materials                 $21,000                 $16,000 

  Work in Process              $44,000                 $40,000 

  Finished Goods               $68,000                 $60,000    

The following actual costs were incurred during the year:

  Purchase of raw materials (all direct)    $133,000 

  Direct labor cost                                             $80,000 

  Manufacturing overhead costs:                               

     Insurance, factory                                      $7,000 

     Depreciation of equipment                    $18,000 

     Indirect labor                                                $42,000 

     Property taxes                                             $9,000 

     Maintenance                                                                $11,000 

     Rent, building                                               $36,000 


1-a.        Compute the predetermined overhead rate for the year.

1-b.        Compute the amount of underapplied or overapplied overhead for the year.


2.            Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.


3-a.        Compute the unadjusted cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.)

3-b.        Identify the options available for disposing of underapplied or overapplied overhead? (You may select more than one answer.

4.            Job 137 was started and completed during the year. What price would have been charged to the customer if the job required $3,200 in materials and $4,200 in direct labor cost, and the company priced its jobs at 40% above the job’s cost according to the accounting system?   

5.            Direct labor made up $8,000 of the $40,000 ending Work in Process inventory balance. Supply the information missing below                    

  Direct materials                              $               

  Direct labor                                      8,000  

  Manufacturing overhead                            

    Work in process inventory       $40,000

I will reay g( & 2 attachments).
 P03-24_solution.docx (18KB)  
 P03-24_solution.xls (106KB)  

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