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# Pacific Manufacturing Company, Job-Order Costing System, Applies Overhead Cost.

The Pacific Manufacturing Company operates a job-order costing system and to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated \$139,500 of manufacturing overhead for an estimated allocation base of \$93,000 direct labor dollars. The company has provided the following data:
Inventories Beginning Ending
Raw materials \$ 21,000 \$ 13,000
Work in process \$ 46,000 \$ 37,000
Finished goods \$ 69,000 \$ 59,000
________________________________________
The following actual costs were incurred during the year:

Purchase of raw materials (all direct) \$ 130,000
Direct labor cost \$ 89,000
Insurance, factory \$ 9,200
Depreciation of equipment \$ 20,000
Indirect labor \$ 53,800
Property taxes \$ 8,700
Maintenance \$ 13,000
Rent, building \$ 33,000
________________________________________
Required:
1-a. Compute the predetermined overhead rate for the year.

1-b. Compute the amount of underapplied or overapplied overhead for the year. (Input the amount as a positive value.)

2. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials. (Input all amounts as positive values.)

Pacific Manufacturing Company
Schedule of Cost of Goods Manufactured
Direct materials:

Total raw materials available
Raw materials used in production \$
Total manufacturing cost
Cost of goods manufactured \$

3. Compute the unadjusted cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.)
4. Job 137 was started and completed during the year. What price would have been charged to the customer if the job required \$3,500 in materials and \$4,200 in direct labor cost, and the company priced its jobs at 20% above the job's cost according to the accounting system?
5. Direct labor made up \$8,300 of the \$37,000 ending Work in Process inventory balance. Supply the information missing below:

-------------------
Selected T-accounts for Rolm Company are given below for the just completed year:
________________________________________Bal. 1/1 33,000 ________________________________________Credits ? ________________________________________Debits 386,000 ________________________________________Credits ?
Debits 490,000
________________________________________ ________________________________________
Bal. 12/31 56,000

Work in Process Factory Wages Payable
________________________________________Bal. 1/1 74,000 ________________________________________Credits 710,000 Debits 174,000 Bal. 1/1 17,000
Direct materials 329,000 Credits 179,000
________________________________________ ________________________________________
Direct labor 117,000 Bal. 12/31 22,000
________________________________________ ________________________________________
Bal. 12/31 ?

Finished Goods Cost of Goods Sold
________________________________________Bal. 1/1 42,000 ________________________________________Credits ? ________________________________________Debits ? ________________________________________
Debits ?
________________________________________ ________________________________________
Bal. 12/31 140,000

Required:
1. What was the cost of raw materials put into production during the year?
2. How much of the materials in (1) above consisted of indirect materials?
3. How much of the factory labor cost for the year consisted of indirect labor?
4. What was the cost of goods manufactured for the year?
5. What was the cost of goods sold for the year (before considering underapplied or overapplied overhead)?
6. If overhead is applied to production on the basis of direct materials cost, what predetermined rate was in effect during the year? (Round your answer to 2 decimal places.)
7. Was manufacturing overhead underapplied or overapplied? By how much? (Input the amount as a positive value.)
8. Compute the ending balance in the Work in Process inventory account. Assume that this balance consists entirely of goods started during the year. If \$32,900 of this balance is direct materials cost, how much of it is direct labor cost? Manufacturing overhead cost? (Round your predetermined overhead rate percentage and final answers to 2 decimal places.)

#### Solution Summary

Your tutorial is attached in two excel files, one for each problem. Instructional notes and computations are shown (click in cells to see calculations) for your study. Numerator and denominator rules are shown for predetermined overhead rate.

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