Cost Management: A Strategic Emphasis
Title: Cost Management: A Strategic Emphasis
Author: Blocher, Stout & Cokins
ISBN: 978-0-07-352694-2
Publisher: McGraw-Hill/Irwin
Application of Factory Overhead
Tomek Company uses a job costing system that applies factory
overhead on the basis of direct labor-hours. The company’s factory overhead budget for 2010 included
the following estimates:
Budgeted total factory overhead $568,000
Budgeted total direct labor-hours 71,000
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Confirming Pages
Chapter 4 Job Costing 113
At the end of the year, the company shows these results:
Actual factory overhead $582,250
Actual direct labor-hours 71,500
The following amounts of the year’s applied factory overhead remained in the various manufacturing
accounts:
Applied Factory Overhead
Work-in-process inventory $139,000
Finished goods inventory 216,840
Cost of goods sold 200,160
Required
1. Compute the firm’s predetermined factory overhead rate for 2010.
2. Calculate the amount of overapplied or underapplied overhead.
3. Prepare a journal entry to transfer the underapplied or overapplied overhead to the Cost of Goods Sold
account (do not use proration).
5-44
ABC and Job-Costing Working with Unknowns North Company designs and manufactures
machines that facilitate DNA sequencing. Depending on the intended purpose of each machine and
its functions, each machine is likely to be unique. The job-order costing system in its Norfolk plant
has five activity cost pools, in addition to direct materials and direct labor. Job TPY–2306 requires
1,000 printed-circuit boards. The cost per board that passes the final inspection is $240. On average,
only 50 percent of the completed units pass the final inspection. The prime costs per completed board
are direct materials $25 and direct labor $5. Information pertaining to manufacturing overhead for
printed-circuit boards follows:
Activity Unit of Factory
Activity Driver Cost Driver Overhead
Cost Pool Cost Driver Rate per Board per Board
Axial insertion Number of axial insertions $0.20 25 $ A?
Hardware insertion Number of hardware insertions 2.00 B?
37.00
Hand load Boothroyd time C? 5 35.50
Masking Number of points masked 0.12 100 D?
Final test Test time E? 10 5.00
Required Fill in the unknowns identified as A through E.
password: shiv
Author: Blocher, Stout & Cokins
ISBN: 978-0-07-352694-2
Publisher: McGraw-Hill/Irwin
Application of Factory Overhead
Tomek Company uses a job costing system that applies factory
overhead on the basis of direct labor-hours. The company’s factory overhead budget for 2010 included
the following estimates:
Budgeted total factory overhead $568,000
Budgeted total direct labor-hours 71,000
blo26940_ch04_091-126.indd 112
blo26940_ch04_091-126.indd 112 6/9/09 2:23:01 PM
6/9/09 2:23:01 PM
Confirming Pages
Chapter 4 Job Costing 113
At the end of the year, the company shows these results:
Actual factory overhead $582,250
Actual direct labor-hours 71,500
The following amounts of the year’s applied factory overhead remained in the various manufacturing
accounts:
Applied Factory Overhead
Work-in-process inventory $139,000
Finished goods inventory 216,840
Cost of goods sold 200,160
Required
1. Compute the firm’s predetermined factory overhead rate for 2010.
2. Calculate the amount of overapplied or underapplied overhead.
3. Prepare a journal entry to transfer the underapplied or overapplied overhead to the Cost of Goods Sold
account (do not use proration).
5-44
ABC and Job-Costing Working with Unknowns North Company designs and manufactures
machines that facilitate DNA sequencing. Depending on the intended purpose of each machine and
its functions, each machine is likely to be unique. The job-order costing system in its Norfolk plant
has five activity cost pools, in addition to direct materials and direct labor. Job TPY–2306 requires
1,000 printed-circuit boards. The cost per board that passes the final inspection is $240. On average,
only 50 percent of the completed units pass the final inspection. The prime costs per completed board
are direct materials $25 and direct labor $5. Information pertaining to manufacturing overhead for
printed-circuit boards follows:
Activity Unit of Factory
Activity Driver Cost Driver Overhead
Cost Pool Cost Driver Rate per Board per Board
Axial insertion Number of axial insertions $0.20 25 $ A?
Hardware insertion Number of hardware insertions 2.00 B?
37.00
Hand load Boothroyd time C? 5 35.50
Masking Number of points masked 0.12 100 D?
Final test Test time E? 10 5.00
Required Fill in the unknowns identified as A through E.
password: shiv
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