The following information, taken from the books of Theodore Co., - 12485

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Request Description

 

The following information, taken from the books of Theodore Co., represents the operations for January:

 

                                                                                                    Bronzing Casting Finishing

 

Materials used. . . . . . used...... . . . . . . . . . . . . . . . . . . . . $ 20,000 $ 10,000 $ 10,000

 

Direct labor cost . . . . . cost..... . . . . . . . . . . . . ...... .  . . . $ 8,000    $ 5,000   $ 9,000

 

Direct labor hours . . . . . . . . . . . ...... . . . . . . . . . . .            1,000        500        1,620

 

Machine hours . . . . . . . . . . . ...... . . . . . . . . . . . ...... . . .    4,000      5,000        2,025

 

Factory overhead. .                             ............... . . . . . . . $ 20,000 $ 10,000 $ 16,200

 

The job cost system is used, and the February cost sheet for Job M45 shows the following:

 

                                                                                               Bronzing Casting Finishing                                            Materials. . . . . . . . . . . . . . ..... . . . . . . . . ...... . . . . . . . $ 20.00    $ 40.00    $ 20.00

 

Direct labor . . . . . . . . . . . ...... . . . . . . . . . . . ...... . . . . $ 64.00     $ 60.00   $ 54.00

 

 Direct labor hours . . . . . . . . . . . ...... . . . . . . . . . . .            8              6              6

 

Machine hours . . . . . . . . . . . ...... . . . . . . . . . . . ...... . . .     2              3              1

 

The following actual information was accumulated during February:

 

                                                                                                Bronzing Casting Finishing

 

Direct labor hours . . . . . . . . . . . ...... . . . . . . . . . . .           15,000    9,800      20,000                                  Factory overhead. . . .                 ............... . . . . . . . $ 350,000 $ 220,000 $ 325,000

 

Required:

 

1. Using the January data, ascertain the factory overhead application rates to be used during February, based on the following: a. Direct labor cost b. Direct labor hours c. Machine hours 2. Prepare a schedule showing the total production cost of Job M45 under each method of applying factory overhead. 3. Prepare the entries to record the following for February operations: a. The liability for total factory overhead. b. Distribution of factory overhead to the departments. c. Application of factory overhead to the work in process, using direct labor hours. ( Use the predetermined rate calculated in 1. and separate applied overhead accounts for each department.) d. Closing of the applied factory overhead accounts. e. Recording under- and overapplied factory overhead and closing the actual factory overhead accounts.

Solution Description