acc

Assignment 3

QUESTION 1

The Polar company uses job-order costing system. The following data relate to the first month of the company’s fiscal year

a. Raw materials purchased on account, $210,000

b. Raw materials issued to production,$190,000 [$178,000 direct materials and $12,000 indirect materials].

c. Direct labour cost incurred, $90,000; indirect labour cost incurred , $110,000

d. Depreciation recorded on factory equipment, $40,000

e. Other manufacturing overhead cost incurred during the month is $70,000 [credit]

f. Company applies manufacturing overhead based on direct labour. Budgeted cost for direct labour cost is $110,000 and estimated direct hours worked during the month are 25000 hours. Actual hours worked was 20,000 hours. Calculate the PR and journalize the applied cost

g. Production orders costing $520,000 were completed and transferred to finished goods

h. Production costing $480,000 were shipped to customers during the month. The company sells its goods 25% above cost. The goods were sold on credit

QUESTION 2

Lotus Ltd has identified the following overhead costs and cost drivers for next year

Overhead Items	ESTIMATED( cost) $
Setups cost	90,000
Ordering Cost	50,000
Maintenance cost	150,000
Power	30,000

The following is one of the jobs completed during the year

	Job 701
Direct materials	$600
Direct Labor	$400
Units completed	100
DLH	20
Number of setups	1
Number of orders	4
Machine hours	40
Kilowatt hours	25
Actual overhead	$1250

The company’s practical activity is 5000 DHL and it uses direct labour to allocate manufacturing overhead

REQUIRED

PART A

1. Calculate the predetermined rate for the plant using functional based costing for job 701

2. Calculate the applied cost for Job 701

3. Calculate total product cost using FBC for job 701

4. Calculate the unit cost for job 701?

5. Is the overhead over-applied or under-applied