Reference: 03-02
Hamilton Company uses job-order costing. Manufacturing overhead is applied using a predetermined rate of
150% of direct labour cost. Any overapplied or underapplied manufacturing overhead is closed to the Cost of
Goods Sold account at the end of each month. Additional information is available as follows:
Job 101 was the only job in process at January 31. The job cost sheet for this job contained the following costs at the beginning of the month: $$\begin{array} { | l | l | }
\hline \text { Direct materials } & \$ 4,000 \
\hline \text { Direct labour } & \$ 2,000 \
\hline \text { Applied manufacturing overhead } & \$ 3,000 \
\hline
\end{array}$$ Jobs 102, 103, and 104 were started during February.
Direct materials requisitions for February totalled $26,000. Direct labour cost of $20,000 was incurred for February. Actual manufacturing overhead was $32,000 for February.
The only job still in process at February 28 was Job 104, with costs of $2,800 for direct materials and $1,800 for direct labour.
-The cost of goods manufactured for February was:
A)$85,000.
B)$77,700.
C)$79,700.
D)$78,000.

Question

Reference: 03-02
Hamilton Company uses job-order costing. Manufacturing overhead is applied using a predetermined rate of
150% of direct labour cost. Any overapplied or underapplied manufacturing overhead is closed to the Cost of
Goods Sold account at the end of each month. Additional information is available as follows:
Job 101 was the only job in process at January 31. The job cost sheet for this job contained the following costs at the beginning of the month: $$\begin{array} { | l | l | } 
\hline \text { Direct materials } & \$ 4,000 \
\hline \text { Direct labour } & \$ 2,000 \
\hline \text { Applied manufacturing overhead } & \$ 3,000 \
\hline
\end{array}$$ Jobs 102, 103, and 104 were started during February.
Direct materials requisitions for February totalled $26,000. Direct labour cost of $20,000 was incurred for February. Actual manufacturing overhead was $32,000 for February.
The only job still in process at February 28 was Job 104, with costs of $2,800 for direct materials and $1,800 for direct labour.
-The cost of goods manufactured for February was:
A)$85,000.
B)$77,700.
C)$79,700.
D)$78,000.

Quizplus · Accepted Answer

The cost of goods manufactured for February can be calculated as follows:1. Calculate the total direct materials cost for February:   - Beginning direct materials for Job 101: $4,000   - Direct materials requisitions for February: $26,000   - Total direct materials: $4,000 + $26,000 = $30,0002. Calculate the total direct labor cost for February:   - Beginning direct labor for Job 101: $2,000   - Direct labor cost incurred for February: $20,000   - Total direct labor: $2,000 + $20,000 = $22,0003. Calculate the total applied manufacturing overhead for February using the predetermined rate of 150% of direct labor cost:   - Total direct labor cost: $22,000   - Applied manufacturing overhead: 150% of $22,000 = $33,0004. Calculate the total manufacturing costs for February:   - Total direct materials: $30,000   - Total direct labor: $22,000   - Total applied manufacturing overhead: $33,000   - Total manufacturing costs: $30,000 + $22,000 + $33,000 = $85,0005. Subtract the costs of the job still in process at the end of February (Job 104) to find the cost of goods manufactured:   - Direct materials for Job 104: $2,800   - Direct labor for Job 104: $1,800   - Applied manufacturing overhead for Job 104: 150% of $1,800 = $2,700   - Total costs for Job 104: $2,800 + $1,800 + $2,700 = $7,3006. Cost of goods manufactured for February:   - Total manufacturing costs: $85,000   - Less costs of Job 104: $7,300   - Cost of goods manufactured: $85,000 - $7,300 = $77,700

Reference: 03-02 Hamilton Company Uses Job-Order Costing Jobs 102, 103, and 104 Were Started During February

Reference: 03-02
Hamilton Company Uses Job-Order Costing Jobs 102, 103, and 104 Were Started During February