Question

SIM Industrial Pte Ltd uses a job-order costing system and applies manufacturing overhead

to jobs using a predetermined overhead rate based on direct labour hours.

At the beginning of the year, the company estimated manufacturing overhead for the year

would be $240,000 and direct labour hours would be 8,000

The following information pertains to November of the current year:

Job 10 Job 11 Job 12 Total

Work-in-process,Nov.1 $16,000 $26,000 $38,000 $80,000

November production activity:

Materials requisitioned $4,000 $4,800 $7,200 $16,000

Direct labour cost $2,400 $3,600 $4,000 $10,000

Machine hours 400 700 900 2,000

The direct labour cost per hour is $20. Actual manufacturing overhead cost incurred in

November was $ 18,000.

Required:

(a)Determine the accumulated total costs of each job as at 30 November.(11marks)

Answer 1

Invoices can be posted in proportion to the hours.

$overhead cost job 11=\frac{400}{2000}\times1800=3600$

similarly for the rest of the work

After the distribution of overhead costs, you can calculate the total cost of the work, add up the direct and overhead costs.