Problem #1 – On May 31, the inventory balances of Tog Designs, a manufacturer of high quality children’s clothing, were as follows: Materials Inventory, $21,360; Work in Process Inventory, $15, 112; and Finished Goods Inventory, $17, 120. Job order cost cards for jobs in process as of June 30 had the following totals: Job no. Direct Materials Direct labor Overhead 24-A $1593 $1290 $1677 24-B $1492 $1380 $1794 24-c $1987 $1760 $2288 24-d $1608 $1540 $2002 The predetermined overhead rate is 130 percent of direct labor cost. Materials purchased and received in June were as follows. June4 -$33120 June 6 – $28, 600 June 22 – $31,920 Direct Labor Cost of June were as follows: June 15 payroll – $23680 June 29 payroll – $25,960 Direct Materials requested by production during June were as follows June 6 – $37,240 June 23 – $38,960 On June 30, Tog Designs sold on account finished goods with a cost of $183,000 for $320,000 Required
1. Using T accounts for Materials Inventory, Work In Process Inventory, Finished Goods Inventory, Overhead, Accounts Receivable, Payroll Payable, Sales, and Cost of Goods Sold, reconstruct the transaction in June, including applying overhead to production.
2. Compute the cost of Units completed during the month 3. Determine the ending inventory balances 4. Jobs 24-A and 24-C were completed during the first week of July. No additional materials cost were incurred, but Job 24-A required $960 more of direct labor, and Job 24-C needed an additional $1610 of direct labor. Job 24-A was composed of $1800 pairs of trousers; Job 24-C, of 900 shirts. Compute the product unit cost for each job.
Problem #2 – Nature Cosmetics Company applies overhead cost on the basis of machine hours. The overhead rate is computed by analyzing data from the previous year to determine the percentage change in cost. Thus, this year’s overhead rate will be based on the percentage change multiplied by last years cost. Last year Machine hours 55, 360 Overhead Cost: Indirect Labor $23500 Employee benefits 28,600 Manufacturer 18,500 Utilities 15000 Factory Insurance 7800 Janitorial Services 12, 100 Depreciation, Factory and Machinery 21,300 Misc. Overhead 6,000 Total Overhead 132,800 This year the cost of utilities is expected to increase by 40 percent over the previous year; the cost of indirect labor, employee benefits, and miscellaneous overhead is expected to increase by 30 percent over the previous year; the cost of insurance is expected and depreciation is expected to increase by 20 percent over the previous year; and the cost of supervision and janitorial services to is expected to increase by 10 percent over the previous year. Machine hours are expected total 68,786. Required
1. Compute the projected cost, and use those cost to calculate the overhead rate for this year (Round the rate to two decimal places)
2. Jobs completed during this year and the machine hours were used for as follows. Jobs no. Machine Hours 2214 12,300 2215NNN-NN-NNNN9800 2217NNN-NN-NNNN11300 2219 8100 Determine the amount of overhead to be applied to each job and to total production during this year.
3. Actual overhead costs for this year were $165,845. Was overhead underapplied or overapplied? By how much? Should the Cost of Goods Sold account be increased or decreased to reflect actual overhead costs?