Design Homes builds custom homes. The firm uses a job-order costing system and applies manufacturing overhead based

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Design Homes builds custom homes. The firm uses a job-order costing system and applies manufacturing overhead based on direct-labor hours from master artisans. Estimated manufacturing overhead for the year is $1,728,000. The firm employs 24 master artisans, who constitute the direct-labor force. Each of these employees is expected to work 2,000 hours during the year. The direct-labor rate is $50 per hour.
There was no beginning balance in the finished goods account. The company worked on three homes during the first quarter. Beginning balances, direct materials used, and direct-labor hours spent were as follows:

Design Homes builds custom homes. The firm uses a job-order

Manufacturing overhead during the first quarter comprised of:
Depreciation ..... $187,500
Indirect labor ...... 50,000
Indirect materials ..... 30,000
Other construction costs ... 108,500

Design completed job no. 101 and job no. 102 during the period. Job no. 101 was sold, producing a profit of $68,000 for the firm.

Required:
a. Determine the company€™s predetermined overhead application rate.
b. Calculate the unadjusted balance for the cost of goods sold accounts.
c. Calculate the adjusted COGS for the period after closing any under- or overapplied overhead to the COGSaccount.

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Related Book For  answer-question

Managerial accounting

ISBN: 978-0471467854

1st edition

Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin

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