The Clash Company uses NORMAL job-order costing. The company includes both direct and indirect materials in...

 

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The Clash Company uses NORMAL job-order costing. The company includes both direct and indirect materials in its Materials Control account. At the end of 2019, the company had a balance of $8,000 in the Materials Control account. The balance in Work in Process Control at the end of 2019 was $15,000 (all charged to Job A). The ending balance for 2019 in Finished Goods Control was $80,000 (which was based on 8,000 units from Job Z at $10 each). The company charges overhead to jobs using direct labor COST. For 2020, the estimated overhead is $132,000 and the estimated direct labor cost is $88,000. The company worked on 4 jobs during 2020. The direct costs charged to these four jobs during 2020 are as follows: Job A Job B Job C Job D Direct Materials S25,000 Direct Labor $14,250 $24,000 $12,900 $20,000 $18,300 $40,000 $11,700 During 2020, the company purchased $91,000 of total materials. The actual overhead for 2020 was $118,800. This amount included $13,000 of indirect materials used during 2020. During the year 2020, the company completed Jobs A, B, and C. Job A consisted of 10,000 units, Job B consisted of 3,000 units, and Job C consisted of 50,000 units. During 2020, the company sold 6,000 units from Job Z, 6,000 units from Job A, all 3,000 units from Job B, and 43,125 units from Job C. The total sales revenue for the year was $400,000. The period expenses for the year were $105,000. 1. Compute the amount of underallocated or overallocated overhead for 2020, and tell whether it is underallocated or overallocated. 2. Prepare, in good form, a Schedule of Cost of Goods Manufactured for 2020. You do not need a heading on your schedule. 3. Prepare, in good form, an income statement for 2020. Assume that the company closes all under- or overallocated overhead to Cost of Goods Sold. You do not need a heading on your income statement. 4. Now assume that the company wants to prorate the under- or overallocated overhead for 2020. If the company prorates based on the total ending balances in the appropriate accounts, compute the PERCENTAGE that would be charged to Cost of Goods Sold. Please show me the numerator and the denominator that you use to compute this percentage, and round the percentage to the nearest per cent. 5. Now prorate the under- or overallocated overhead using the most theoretically correct method. Compute the amount that would be charged to cach appropriate account. Please show all of your work. 6. ir the company was using actual costing for the year 2020, compute the actual overhead rate for the year. The actual rate is still based on direct labor cost. 7. Based on your answer in question 6, how much actual overhead would have been charged to Job D during 2020? 3. Now go back to your answers in question 5 (prorating in the theoretically correct manner). Compute the allocated overhead charged to Job D during 2020 using normal costing, and then add or subtract the adjustment that you computed in question 5 for Work in Process. . Which of the following is true? Your answers in question 7 and question 8 should be the same. Your answers in question 7 and question 8 should not be the same. The Clash Company uses NORMAL job-order costing. The company includes both direct and indirect materials in its Materials Control account. At the end of 2019, the company had a balance of $8,000 in the Materials Control account. The balance in Work in Process Control at the end of 2019 was $15,000 (all charged to Job A). The ending balance for 2019 in Finished Goods Control was $80,000 (which was based on 8,000 units from Job Z at $10 each). The company charges overhead to jobs using direct labor COST. For 2020, the estimated overhead is $132,000 and the estimated direct labor cost is $88,000. The company worked on 4 jobs during 2020. The direct costs charged to these four jobs during 2020 are as follows: Job A Job B Job C Job D Direct Materials S25,000 Direct Labor $14,250 $24,000 $12,900 $20,000 $18,300 $40,000 $11,700 During 2020, the company purchased $91,000 of total materials. The actual overhead for 2020 was $118,800. This amount included $13,000 of indirect materials used during 2020. During the year 2020, the company completed Jobs A, B, and C. Job A consisted of 10,000 units, Job B consisted of 3,000 units, and Job C consisted of 50,000 units. During 2020, the company sold 6,000 units from Job Z, 6,000 units from Job A, all 3,000 units from Job B, and 43,125 units from Job C. The total sales revenue for the year was $400,000. The period expenses for the year were $105,000. 1. Compute the amount of underallocated or overallocated overhead for 2020, and tell whether it is underallocated or overallocated. 2. Prepare, in good form, a Schedule of Cost of Goods Manufactured for 2020. You do not need a heading on your schedule. 3. Prepare, in good form, an income statement for 2020. Assume that the company closes all under- or overallocated overhead to Cost of Goods Sold. You do not need a heading on your income statement. 4. Now assume that the company wants to prorate the under- or overallocated overhead for 2020. If the company prorates based on the total ending balances in the appropriate accounts, compute the PERCENTAGE that would be charged to Cost of Goods Sold. Please show me the numerator and the denominator that you use to compute this percentage, and round the percentage to the nearest per cent. 5. Now prorate the under- or overallocated overhead using the most theoretically correct method. Compute the amount that would be charged to cach appropriate account. Please show all of your work. 6. ir the company was using actual costing for the year 2020, compute the actual overhead rate for the year. The actual rate is still based on direct labor cost. 7. Based on your answer in question 6, how much actual overhead would have been charged to Job D during 2020? 3. Now go back to your answers in question 5 (prorating in the theoretically correct manner). Compute the allocated overhead charged to Job D during 2020 using normal costing, and then add or subtract the adjustment that you computed in question 5 for Work in Process. . Which of the following is true? Your answers in question 7 and question 8 should be the same. Your answers in question 7 and question 8 should not be the same.

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