Order Costing

E$2-41$ Manufacturing cost data for Olsen Company, which uses a job order cost system,

are presented below.

Direct materials used

Direct labor

Manufacturing overhead applied

Total manufacturing costs

Work in process $\frac{1}{1}\frac{?}{14}$

Total cost of work in process

Work in process $\frac{12}{31}\frac{?}{14}$

Cost of goods manufactured

Instructions

Indicate the missing amount for each letter: Assume that in all cases manufacturing over$-$

head is applied on the basis of direct labor cost and the rate is the same.

E$2-5$B Pronto Kopy Company applies operating overhead to photocopying jobs on the

basis of machine hours used. Overhead costs are expected to total $$320,000$ for the year;

and machine usage is estimated at $125,000$ hours.

For the year, $$308,000$ of overhead costs are incurred and $130,000$ hours are used.

Instructions

$($a$)$ Compute the service overhead rate for the year:

$($b$)$ What is the amount of under$-$ or overapplied overhead at December $31?$

$($c$)$ Assuming the under$-$or overapplied overhead for the year is not allocated to inventory

accounts, prepare the adjusting entry to assign the amount to cost of jobs finished.