Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 29

Job Costing

 Johnson Inc. is a job-order manufacturing company that uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. For 2010, estimated direct labor-hours are 95,000, and estimated factory overhead is $617,500. The following information is for September 2010. Job A was completed during September, and Job B was started but not finished.

September 1, 2010, inventories
?Materials inventory	$ 7,500
?Work-in-process inventory (All Job A)	31,200
?Finished goods inventory	67,000
Material purchases	104,000
Direct materials requisitioned
?Job A	65,000
?Job B	33,500
Direct labor-hours
?Job A	4,200
?Job B	3,500
Labor costs incurred
?Direct labor ($8.50/hour)	65,450
?Indirect labor	13,500
?Supervisory salaries	6,000
Rental costs
?Factory	7,000
?Administrative offices	1,800
Total equipment depreciation costs
?Factory	7,500
?Administrative offices	1,600
Indirect materials used	12,000

Required

1. What is the total cost of Job A?

2. What is the total factory overhead applied during September?

3. What is the overapplied or underapplied overhead for September?

Step 1 of 5

Overapplied overhead is the case when the applied factory overhead cost is greater than the actual factory overhead cost. Underapplied overhead is the case when the applied factory overhead cost is lesser than the actual factory overhead cost.