Playmore Costume Company, located in Toronto, sews costumes for plays and musicals. Playmore considers itself primarily a service firm, as it never produces costumes without a preexisting order and only purchases materials to the specifications of the particular job. Any finished goods ending inventory is temporary and is zeroed out as soon as the show producer pays for the order. Overhead is applied on the basis of direct labour cost. During the first quarter of the year, the following activity took place in each of the accounts listed:

Job 32 was the only job in process at the end of the first quarter. A total of 1,000 direct labour hours at $10 per hour were charged to Job 32.
Required:
1. Assuming that overhead is applied on the basis of direct labour cost, what was the overhead rate used during the first quarter of the year?
2. What was the applied overhead for the first quarter? The actual overhead? The under- or overapplied overhead?
3. What was the cost of the goods manufactured for the quarter?
4. Assume that the overhead variance is closed to the Cost of Goods Sold account. Prepare the journal entry to close out the Overhead Control account. What is the adjusted balance in Cost of Goods Sold?
5. For Job 32, identify the costs incurred for direct materials, direct labour, and overhead.

Transcribed Image Text:

Work in Process 17,000 Complete 245,000 80,000 140,000 Finished Goods 40,000 Sold Bal. 210,000 Bal. DL Complete 245,000 OH Bal. DM Bal. 40,000 Cost of Goods Sold 210,000 Overhead 138,500 Bal. 140,000 1,500