please answer a, b and c O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit is built to customer specifications). O’Leary uses a normal job costing system. Direct labor at O’Leary is paid $29 per hour, but the employees are not paid if they are not working on jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows. Year 1 Year 2 Direct labor-hours worked 69,400 56,400 Manufacturing overhead costs incurred Indirect labor $ 2,856,000 $ 2,256,000 Employee benefits 1,041,000 846,000 Supplies 694,000 564,000 Power 651,000 546,000 Heat and light 142,800 142,800 Supervision 783,210 663,450 Depreciation 2,054,500 2,054,500 Property taxes and insurance 799,490 823,250 Total manufacturing overhead costs $ 9,022,000 $ 7,896,000 At the beginning of year 3, O’Leary has two jobs, which have not yet been delivered to customers. Job MC-270 was completed on December 27, year 2. It is scheduled to ship on January 7, year 3. Job MC-275 is still in progress. For the purpose of computing the predetermined overhead rate, O’Leary uses the previous year’s actual overhead rate. Data on direct material costs and direct labor-hours for these jobs in year 2 follow. Job MC-270 job mc 275 Direct material costs $ 272,400 $ 497,400 Direct labor-hours 2,620 hours 3,320 hours During year 3, O’Leary incurred the following direct material costs and direct labor-hours for all jobs worked in year 3, including the completion of Job MC-275. Direct material costs $ 11,842,400 Direct labor-hours 76,400 Actual manufacturing overhead $ 9,696,000 At the end of year 3, there were four jobs that had not yet shipped. Data on these jobs follow. MC-389 MC-390 MC-397 MC-399 Direct materials $45,600 $69,400 $105,900 $31,300 Direct labor-hours 1,764 hours 2,820 hours 6,220 hours 1,420 hours Job status Finished Finished In progress In progress Required: a. What was the amount in the beginning Finished Goods and beginning Work-in-Process accounts for year 3? b. O’Leary incurred direct materials costs of $59,400 and used an additional 540 hours in year 3 to complete job MC-275. What was the final (total) cost charged to job MC-275? c. What was over- or underapplied overhead for year 3?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
please answer a, b and c
O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit is built to customer specifications). O’Leary uses a normal
| Year 1 | Year 2 | ||||
| Direct labor-hours worked | 69,400 | 56,400 | |||
| Manufacturing overhead costs incurred | |||||
| Indirect labor | $ | 2,856,000 | $ | 2,256,000 | |
| Employee benefits | 1,041,000 | 846,000 | |||
| Supplies | 694,000 | 564,000 | |||
| Power | 651,000 | 546,000 | |||
| Heat and light | 142,800 | 142,800 | |||
| Supervision | 783,210 | 663,450 | |||
| 2,054,500 | 2,054,500 | ||||
| Property taxes and insurance | 799,490 | 823,250 | |||
| Total manufacturing overhead costs | $ | 9,022,000 | $ | 7,896,000 | |
At the beginning of year 3, O’Leary has two jobs, which have not yet been delivered to customers. Job MC-270 was completed on December 27, year 2. It is scheduled to ship on January 7, year 3. Job MC-275 is still in progress. For the purpose of computing the predetermined overhead rate, O’Leary uses the previous year’s actual overhead rate. Data on direct material costs and direct labor-hours for these jobs in year 2 follow.
| Job MC-270 | job mc 275 | ||||||
| Direct material costs | $ | 272,400 | $ | 497,400 | |||
| Direct labor-hours | 2,620 | hours | 3,320 | hours | |||
During year 3, O’Leary incurred the following direct material costs and direct labor-hours for all jobs worked in year 3, including the completion of Job MC-275.
| Direct material costs | $ | 11,842,400 |
| Direct labor-hours | 76,400 | |
| Actual manufacturing overhead | $ | 9,696,000 |
At the end of year 3, there were four jobs that had not yet shipped. Data on these jobs follow.
| MC-389 | MC-390 | MC-397 | MC-399 | |
| Direct materials | $45,600 | $69,400 | $105,900 | $31,300 |
| Direct labor-hours | 1,764 hours | 2,820 hours | 6,220 hours | 1,420 hours |
| Job status | Finished | Finished | In progress | In progress |
Required:
a. What was the amount in the beginning Finished Goods and beginning Work-in-Process accounts for year 3?
b. O’Leary incurred direct materials costs of $59,400 and used an additional 540 hours in year 3 to complete job MC-275. What was the final (total) cost charged to job MC-275?
c. What was over- or underapplied overhead for year 3?
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