Question

Question 2 (5 marks) Company S specializes in the production of brass musical instruments for students. In the first quarter of 202N, the company produced 2 batches of products: order A46 (46 trumpets of class A) and order B10 (10 trumpets of class B). There were transactions arising in the quarter as follows: (Figure in: $)

1. Raw materials were used in production for A 46: 25 kg copper tube, unit price 70/kg, for B10: 100kg copper tube, unit price 100/kg.
2. Raw materials were used in production 10 liters of fuel, unit price 18/liter
3. Based on the quarterly labor sheet: - Direct working time: Order A46: 800 hours, unit price 50/hour Order B10: 900 hours, unit price 50/hour - Indirect labor costs: Workshop staff: 5000 Workshop manager salary: 9000
4. Factory and equipment depreciation: 12000
5. Warehouse rent in the quarter: 2000
6. Electricity and water used in the workshop: 2100
7. Order A46 was completed during the quarter. Half of the class A trumpets sold in the quarter for 800/piece, 10% VAT.
The company allocates manufacturing overhead according to direct labor time. Predetermined manufacturing overhead is 426,300, and direct labor time is estimated at 20.300 hours.
Required: 2.1. Determine the predetermined manufacturing overhead rate for each order?
2.2. Make a job cost sheet for order A46?
2.3. Determine the Manufacturing Overhead underapplied or overapplied and record it into the T account

Answer 1

Given:

Total estimated manufacturing overhead: $426,300

Total estimated direct labor time: 20,300 hours

Predetermined manufacturing overhead rate = Total estimated manufacturing overhead / Total estimated direct labor time

For Order A46:

Direct labor time for Order A46: 800 hours

Predetermined manufacturing overhead rate for Order A46 = $426,300 / 20,300 hours = $20.98 per direct labor hour (rounded to two decimal places)

For Order B10:

Direct labor time for Order B10: 900 hours

Predetermined manufacturing overhead rate for Order B10 = $426,300 / 20,300 hours = $20.98 per direct labor hour (rounded to two decimal places)

2.2. Job Cost Sheet for Order A46:

Order A46

Direct Materials:

Copper tube (25 kg * $70/kg) = $1,750

Direct Labor:

Direct labor hours (800 hours * $50/hour) = $40,000

Manufacturing Overhead Applied:

Direct labor hours * Predetermined manufacturing overhead rate:

(800 hours * $20.98/hour) = $16,784 (rounded to two decimal places)

Total Cost:

Direct Materials + Direct Labor + Manufacturing Overhead Applied:

$1,750 + $40,000 + $16,784 = $58,534

2.3. To determine the Manufacturing Overhead underapplied or overapplied, we would need the actual manufacturing overhead incurred during the quarter and the actual direct labor time for Order A46. Unfortunately, that information is not provided, so we cannot determine the underapplied or overapplied manufacturing overhead or record it in the T-account.

Please note that without the missing information, we are unable to provide a complete analysis of manufacturing overhead.