yler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $420,000 and total machine hours at 60,000. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 Total Direct materials used $ 19,200 $ 14,400 $ 9,600 $ 43,200 Direct labor $ 28,800 $ 11,200 $ 9,600 $ 49,600 Machine hours 1,000 hours 4,000 hours 2,000 hours 7,000 hours Job 101 was completed and sold for $60,000. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $45,000. Required: 1. Calculate the predetermined overhead rate. 2. Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations. 3. Compute the balance in the Work in Process Inventory account at the end of the first month.

1. $7.00

2. $49,000

3. $33,200

Explanation:

1. The computation of predetermined overhead rate is shown below:-

Predetermined overhead rate = Estimated overhead ÷ Estimated machine hours

= $420,000 ÷ 60,000

= $7.00

2. The computation of total manufacturing overhead applied is shown below:-

Particulars                    Job 101    Job 102      Job 103     Total

Direct material             $19,200    $14,400     $9,600    $43,200

Direct labor                  $28,800    $11,200     $9,600    $49,600

Manufacturing

overhead                      $7,000      $28,000    $14,000   $49,000

Total                              $55,000    $53,600    $33,200  $141,800

3. The computation of balance in the Work in Process Inventory account at the end of the first month is shown below:-

Particulars                    Job 101    Job 102      Job 103     Total

Direct material             $19,200    $14,400     $9,600    $43,200

Direct labor                  $28,800    $11,200     $9,600    $49,600

Manufacturing

overhead                      $7,000      $28,000    $14,000   $49,000

Total                              $55,000    $53,600    $33,200  $141,800

Job 101 is completed and sold

Job 102 is completed and kept in finished goods inventory.

Job 103 is balance which indicates the work in progress.

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