Class Problem $2-$ Johnson Manufacturing

Johnson Manufacturing uses a job order costing system for its production costs. A predetermined cost driver rate based on machine hours is used to apply overhead to individual jobs. The following information is for the month of March, when jobs $1$ and $2$ were completed. Job $1$ was the only job that was sold at the end of the period. Budgeted overhead for $2010$ is $\backslash (\backslash$$ $360,000\backslash ),$ and estimated machine hours are $60,000.$ March sales were $\backslash$$$120,000.$

Direct Labor costs are paid at $\backslash (\backslash$$ $15\backslash )$ per hour. Actual direct labor hours used for each job were as follows: Job $1$ used $500$ DL hours, Job $2$ used $1000$ DL hours, and Job $3$ used $1500$ DL hours. Supervisor and staff salaries for the month were $\backslash (\backslash$$ $30,000\backslash ).$ Actual Machine hours used for each job in December were as follows: $1,000$ MH for Job $1,2,000$ MH for Job $2,$ and $3,500$ MH for Job $3.$ Other factory costs included:

Beginning Balances:

Raw materials

Finished Goods

Purchases of raw materials

$\backslash$$ $11,000$

$\backslash$$ $120,000$

$\backslash$$ $115,000$

Materials requisitioned for production

Other Costs:

Depreciation on plant equipment Utilities

Repairs and Maintenance on plant

Sales Commissions

Customer Service

Janitorial Services on Admin offices

$\backslash$$ $5,000$

$\backslash$$ $\backslash (8,0001/2\backslash )$ on Plant, $\backslash (1/2\backslash )$ administrative offices

$\backslash$$ $5,000$

$\backslash$$ $15,000$

$\backslash$$ $20,000$

$\backslash$$ $10,000$

$1.$ Compute the predetermined overhead rate.

$2.$ Compute the total cost of job $1$ when it is finished in March and sold.

$3.$ Compute the total overhead costs applied to all jobs during March, assuming $\backslash (6,500\backslash$mathrm$\{$MH$\}\backslash )$ were used

$4.$ Compute the actual amount of overhead incurred during March.

$5.$ Was overhead underapplied or overapplied in the month of March? What is the journal entry $($assuming the difference is immaterial$)?$

$6.$ What was Cost of Goods available for sale prior to the selling of Job $1?\_$

$7.$ What was Net Income for the month of March?