MANAGERIAL ACCOUNTING

HANDOUT PROBLEM 4

Score__________ Name______________________________________

Section_____________________________________

Problem (10 points).

The Ruffalo Company uses a job cost accounting system. Manufacturing overhead is applied to

production at a predetermined rate of 150% of direct labor cost. Any over- or underapplied

manufacturing overhead is closed to the cost of goods sold account at the end of each month.

Additional information is attached.

REQUIRED: (1) What was the cost of goods manufactured for February? Show computations.

(2) What was the amount of over- or underapplied overhead closed to the cost of

goods sold account at February 28? Show computations.

computations.

RUFFALO COMPANY

ADDITIONAL INFORMATION RELATING TO

MANUFACTURING OPERATIONS

FOR MONTH ENDING FEBRUARY 28

(a) Job 101 was the only job in process at January 31, with accumulated costs as follows.

Direct Materials $ 4,000

Direct Labor 2,000

Manufacturing Overhead Applied 3,000

Total Costs $ 9,000

Jobs 102, 103, and 104 were started during February. Direct materials requisitions for

February totaled $26,000. Direct labor cost of $20,000 was incurred during February.

Actual manufacturing overhead for February was $32,000. The only job still in process on

February 28 was Job 104, with costs of $2,800 for direct materials and $1,800 for direct

labor.