Question 1

Christchurch Packaging Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

 

  Machine-hours required to support estimated production 154,000
  Fixed manufacturing overhead cost $659,000
  Variable manufacturing overhead cost per machine-hour $4.50

 

Required (show your calculations):

 

a. Compute the predetermined overhead rate.

b. During the year, Job 546 was started and completed. The following information was available with respect to this job:

 

  Direct materials requisitioned $370
  Direct labour cost $250
  Machine-hours used 34

 

Compute the total manufacturing cost assigned to Job 546.

 

c. During the year, the company worked a total of 145,700 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,283,246. What is the amount of underapplied or overapplied overhead for the year?

 

d. With reference to your answers to (c), if the underapplied/overapplied overhead amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease? Explain your responses.

 

 

Question 2

Just Jeans uses the weighted-average method in its process costing system. The following data concern the operations of the company’s first processing department for a recent month:

Work in process, beginning:
   Units in process 300
   Percent complete with respect to materials 60%
   Percent complete with respect to conversion 30%
 

Costs in the beginning WIP inventory:

   Materials cost $342
   Conversion cost $2,394
Units started into production during the month 21,000
Units completed and transferred out 20,700
Costs added to production during the month:
   Materials cost $44,136
   Conversion cost $546,750
Work in process, ending:
   Units in process 600
   Percent complete with respect to materials 80%
   Percent complete with respect to conversion 30%

 

Required (show your calculations):

a. Determine the equivalent units of production for the month.

b. Determine the costs per equivalent unit.

c. Determine the cost of ending work in process inventory

d. Determine the cost of transferred out units.

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