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Part 1:

Granite Company uses a job order costing system. The company applied manufacturing overhead to jobs using a predetermined overhead rate based on direct labor hours. Last year, manufacturing overhead and direct labor hours were estimated at $80,000 and 16,000 hours respectively, for the year. In June, Job #315 was completed. Material cost on the job totaled $1,500 and labor cost totaled $2,400 at $6 per hour. At the end of the year, it was determined that the company worked 15,000 direct labor hours for the year, and incurred $78,000 in actual manufacturing overhead costs.

Required: (Please show work)

1. Determine the predetermined overhead rate for the year.

2. Determine the amount of overhead charged to jobs during the year

3. Determine the amount of underapplied or overapplied overhead for the year.

4. Assuming that 100 units were completed, determine the unit cost that would appear on the job cost sheet for Job #315.

Part II:

Alake Company is a manufacturing firm that uses job order costing. At the beginning of the year, the companys inventory balances were as follows:

Raw Materials $19,000

Work in Process $82,000

Finished Goods $32,000

The company applied overhead to jobs using a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated that it would work 36,000 machine hours and incur $216,000 in manufacturing overhead cost. The following transactions were recorded for the year:

Required:

Prepare the appropriate journal entry for each of the items above. You can assume that all transactions with employees, customers, and suppliers were conducted in cash.

a. Raw Materials were purchased $443,000.

Account Title	Debit	Credit

b. Raw materials were requisitioned for use in production, $450,000 ($435,000 direct and $15,000 indirect).

Account Title	Debit	Credit

c. The following employee costs were incurred:

Direct labor $229,000

Indirect labor $ 54,000

Administrative salaries $117,000

Account Title	Debit	Credit

d. Selling costs, $119,000

Account Title	Debit	Credit

e. Factory utility costs, $21,000

Account Title	Debit	Credit

f. Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general and administrative activities.

Account Title	Debit	Credit

g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 38,000 machine hours.

Account Title	Debit	Credit

h. The cost of goods manufactured for the year was $910,000

Account Title	Debit	Credit

i. Sales for the year totaled $1,173,000 and the costs on the job cost sheets of the goods that were sold totaled $895,000.

Account Title	Debit	Credit

j. The balance in the Manufacturing Overhead account was closed to Cost of Goods Sold.

Account Title	Debit	Credit

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