Question

Tiana Shar, the controller for Caesar Glassware Company, is in the process of analyzing the overhead costs for the month of November. She has gathered the following data for the month.
Labor
Direct-labor hours:
Job 57............................................................................. 7,000
Job 58............................................................................. 6,000
Job 59............................................................................. 4,000
Labor costs:
Direct-labor wages.......................................................... $408,000
Indirect-labor wages....................................................... 30,000
Supervisory salaries......................................................... 12,000
Material
Inventories, November 1:
Raw material and supplies................................................ $ 21,000
Work in process (Job 57).................................................. 108,000
Finished goods.................................................................. 125,000
Purchases of raw material and supplies:
Raw material..................................................................... $270,000
Supplies (indirect material)................................................ 30,000
Direct material and supplies requisitioned for production:
Job 57................................................................................. $ 90,000
Job 58.................................................................................. 75,000
Job 59................................................................................... 51,000
Supplies (indirect material)................................................. 24,000
Total.................................................................................. $240,000
Other
Building occupancy costs (heat, light, depreciation, etc.)
Factory facilities............................................................... $ 12,800
Sales offices..................................................................... 3,200
Administrative offices...................................................... 2,000
Total............................................................................... $ 18,000
Production equipment costs:
Power............................................................................. $ 8,200
Repairs and maintenance................................................... 3,000
Depreciation........................................................................ 3,000
Other................................................................................... 2,000
Total................................................................................... $ 16,200
The firm’s job-order costing system uses direct-labor hours (measured at practical capacity) as the cost driver for overhead application. In December of the preceding year, Shar had prepared the following budget for direct-labor and manufacturing-overhead costs for the current year. The plant is theoretically capable of operating at 140,000 direct-labor hours per year. However, Shar estimates that the practical capacity is 115,000 hours in a typical year.

.:.
During November the following jobs were completed:
Job 57 .............................................. 10 oz. water glasses
Job 58 ................................................ 5 oz. juice glasses

Required
Assist Shar by making the following calculations.
1. Calculate the predetermined overhead rate for the current year.
2. Calculate the total cost of Job 57.
3. Compute the amount of manufacturing overhead applied to Job 59 during November.
4. What was the total amount of manufacturing overhead applied during November?
5. Compute the actual manufacturing overhead incurred during November.
6. Calculate the overapplied or underapplied overhead for November.
(CMA, adapted)




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  • CreatedApril 22, 2014
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