Trenton Ltd. uses a normal job-costing system and applies manufacturing overhead to products on the basis of
Question:
Trenton Ltd. uses a normal job-costing system and applies manufacturing overhead to products on the basis of machine-hours. At the beginning of 2015, the company controller budgeted annual overhead at $1,500,000. She also forecast that machine-hours would total 48,000. Actual costs were as follows:
Direct material (DM) used.......................$ 340,000
Direct labour.........................................875,000
Manufacturing overhead (MOH)...............1,605,000
Actual machine-hours worked during the year were 49,200. Trenton adjusts any under allocated or over allocated overhead to cost of goods sold. The company's records show that total sales for the year were $2,938,000 and cost of goods sold (before adjustment) equalled $2,260,000.
Required
1. Determine the company's budgeted overhead rate.
2. Determine the amount of under allocated or over allocated overhead for the year.
3. Compute the company's cost of goods sold after the adjustment for overhead.
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham