Reference no: EM132686766

1. Purchased additional raw materials of $46,000 on account.

Compute the manufacturing overhead rate and under- or overapplied overheadAries Manufacturing uses a job order cost system and applies overhead to production on the basis of direct labor hours.only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $10,000; direct labor $6,000; and manufacturing overhead $9,000. Job No. 23 had been completed at a cost of $45,000 and was part of finished goods inventory. There was a $5,000 balance in the Raw Materials Inventory account.

During the month of January, the company began production on Jobs 26 and 27, and completed Jobs 25 and 26. Jobs 23 and 25 were sold on account during the month for $65,000 and $74,000, respectively. The following additional events occurred during the month.

2. Incurred factory labor costs of $31,900. Of this amount $7,000 related to employer payroll taxes.

3. Incurred manufacturing overhead costs as follows: indirect materials $10,000; indi- rect labor $7,500; depreciation expense $12,000; and various other manufacturing overhead costs on account $11,000.

4. Assigned direct materials and direct labor to jobs as follows.

Job No.                             25                    26                       27

Direct Materials           $5,000         15,000               13,000

Direct Labor                 $3,000             12,000               9,900

5. The company uses direct labor hours as the activity base to assign overhead. Direct labor hours incurred on each job were as follows: Job No. 25, 200; Job No. 26, 800; and Job No. 27, 660.

Instructions

Problem (a) Calculate the predetermined overhead rate for the year 2014, assuming Aries Manufacturing estimates total manufacturing overhead costs of $450,000, direct labor costs of $300,000, and direct labor hours of 20,000 for the year.

Problem (b) Open job cost sheets for Jobs 25, 26, and 27. Enter the January 1 balances on the job cost sheet for Job No. 25.

Problem (c) In assigning manufacturing over- head costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary.

Problem (d) Total the job cost sheets for any job(s) completed during the month.

Problem (e) What is the balance in the Work in Process Inventory account at the end of the month? What does this balance consist of?

Problem (f) What is the amount of over or underapplied overhead?