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Job Order Costing Problems

Samli Company estimated annual manufacturing overhead costs would be $600,000 based on direct labor costs of $460,000 and labor and machine hours. Actual overhead was $602,000 with actual labor costs of $456,000 and similar hours. Samli applies overhead based on direct labor hours using a predetermined rate. The problems provide information to compute predetermined overhead rates, cost of goods sold, and determine if overhead is over- or underapplied.

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Trine De Leon
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250 views2 pages

Job Order Costing Problems

Samli Company estimated annual manufacturing overhead costs would be $600,000 based on direct labor costs of $460,000 and labor and machine hours. Actual overhead was $602,000 with actual labor costs of $456,000 and similar hours. Samli applies overhead based on direct labor hours using a predetermined rate. The problems provide information to compute predetermined overhead rates, cost of goods sold, and determine if overhead is over- or underapplied.

Uploaded by

Trine De Leon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Job order Costing

PROBLEM 1
Samli Company estimates that annual manufacturing overhead costs will be $600,000.
Estimated annual operating activity bases are: direct labor cost $460,000, direct labor
hours 40,000 and machine hours 80,000. The actual manufacturing overhead cost for the
year was $602,000 and the actual direct labor cost for the year was $456,000. Actual direct
labor hours totaled 40,200 and machine hours totaled 79,000. Samli applies overhead based
on direct labor hours.
Instructions
Compute the predetermined overhead rate and determine the amount of manufacturing
overhead applied. Determine if overhead is over- or underapplied and the amount.

PROBLEM 2 Martin Company applies manufacturing overhead based on direct labor


hours. Information concerning manufacturing overhead and labor for the year follows:
Actual manufacturing overhead $150,000
Estimated manufacturing overhead $140,000
Direct labor hours incurred 4,800
Direct labor hours estimated 5,000
Instructions
Compute the predetermined overhead rate.

PROBLEM 3
The manufacturing operations of Reason, Inc. had the following balances for the month of
January:
Inventories January 1 January 31
Raw materials $12,000 $13,000
Work in process 21,000 23,000
Finished goods 14,000 16,000
Reason transferred $220,000 of completed goods out of work in process during January.
Instructions
Compute the cost of goods sold.
PROBLEM 4
The following amounts were reported by Samli Company before adjusting its immaterial
overapplied manufacturing overhead of $8,000.
Raw Materials Inventory $ 40,000
Finished Goods Inventory 60,000
Work in Process Inventory 100,000
Cost of Goods Sold 840,000
Instructions
Compute what amount Samli will report as cost of goods sold after it disposes of its
overapplied overhead.

PROBLEM 5
During 2008, Mix Company incurred the following direct labor costs: January $10,000 and
February $20,000. Mix uses a predetermined overhead rate of 120% of direct labor cost.
Estimated overhead for the 2 months, respectively, totaled $13,000 and $23,800. Actual
overhead for the 2 months, respectively, totaled $12,300 and $21,800.
Instructions
Determine if overhead is over- or underapplied for each of the two months and the
respective amounts.

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