Question: S2 3 Comprehensive Job Order Costing Case Sampson Company uses a

S2-3 Comprehensive Job Order Costing Case
Sampson Company uses a job order cost system with overhead applied to products based on direct labor hours. Based on previous history, the company estimated its total overhead for the coming year (2014) to be $720,000 and its total direct labor hours to be 24,000.
On January 1, 2014, the general ledger of Sampson Company revealed that it had one job in process (Job 102) for which it had incurred a total cost of $15,000. Job 101 had been finished the previous month for a total cost of $30,000 but was not yet sold. The company had a contract for Job 103 but had not started working on it yet. Other balances in Raw Materials Inventory and other assets, liabilities, and stockholders’ equity accounts are summarized on the next page.

1. Compute and interpret the predetermined overhead rate.
2. How much overhead would be applied to jobs during the period?
3. Compute the total cost of Jobs 102 and 103 at the end of the period. Where would the cost
of each of these jobs appear on the year-end balance sheet?
4. Prepare journal entries to record the January transactions and post the entries to the general
ledger T-accounts given earlier in the problem.
5. Calculate the amount of over- or underapplied overhead.
6. Prepare the journal entry to dispose of the overhead balance assuming that it had been a year-
end balance instead of a month-end balance. Post the effect to the general ledger T-accounts.
7. Prepare a statement of cost of goods manufactured report including the adjustment for over-
or underapplied overhead.
8. Prepare a brief income statement for Sampson Company.

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