ACC $232$ NAME

CH $2$ Excel Homework $($job order costing$)$

based on CT$-1$ in MAP workbook pg $65$

updated for $24$FAL

Information provided:

MW Clothing is a machine$-$intensive manufacturing company that produces clothes for many different retailers. The

company recently finished working on an order from a customer, which consisted of $50$ blue colored jeans with

specifications of a $32-$inch waist and $32-$inch length. The following cost data relate to the manufacturing activities of

MW Clothing for this order.

$*$Factory insurance, depreciation and utilities$$ costs are considered indirect manufacturing overhead costs.

Data provided:

Direct Materials $ $5,000$

Direct Labor $ $2,300$

Indirect Materials $ $500$

Indirect Labor $ $1,000$

Salaries, Administrative staff $ $10,000$

Insurance, factory $ $150$

Depreciation, factory $ $750$

Utilities, factory $ $1,400$

Direct Labor Hours $200$

Machine Hours $1,500$

Part a$)$ Why would job order costing be suitable to calculate the cost of this order?

Part b$)$ Calculate the total manufacturing overhead costs incurred by the company. $($Hint: this is actual overhead with a

detailed list of costs needed here.$)$

Total manufacturing overhead costs $ $-$

Part c$)$ Calculate the predetermined overhead rate for the company using direct labor hours as an allocation base using

the following information.

Total Estimated Overhead costs $ $50,000$

Total Estimated Direct Labor Hours $2,500$

Total Estimated Machine Hours $20,000$

Part d$)$ Calculate the predetermined overhead rate for the company using machine hours as an allocation base using the

above information.

Part e$)$ Calculate the total overhead cost that will be allocated to this job, using the predetermined overhead rates

calculated in both part c$)$ and d$).$

Part f$1)$ Calculate the variance or difference of actual overhead vs allocated overhead using both allocation bases $($labor

hours and machine hours$).$

Part f$2)$ Which allocation base results in a smaller variance between actual and estimated manufacturing overhead as

in which allocation base should the company use to calculate the predetermined overhead rate? Explain why.

Part g$)$ Consider how to account for the underallocation of manufacturing overhead under the cost of goods sold

method with the machine hours allocation. Record the complete jounal entry for the underallocation of manufacturing

overhead.