Juarez, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to
Question:
The data that follow pertain to job no. DC66, the only job in production at year-end.
Selling and administrative expense amounted to $2,325,000.
Required:
1. Assuming the use of normal costing, determine the predetermined overhead rates used in the Machining Department and the Assembly Department.
2. Compute the cost of the companys year-end work-in-process inventory.
3. Determine whether overhead was under- or overapplied during the year in the Machining Department.
4. Repeat requirement (3) for the Assembly Department.
5. If Juarez disposes of under- or overapplied overhead as an adjustment to Cost of Goods Sold, would the companys Cost of Goods Sold account increase or decrease? Explain.
6. How much overhead would have been charged to the companys Work-in-Process account during the year?
7. Comment on the appropriateness of the companys cost drivers (i.e., the use of machine hours in Machining and direct-labor cost inAssembly).
Step by Step Answer:
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078025662
10th edition
Authors: Ronald Hilton, David Platt