General Electric employs a job order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations: (20 pts)

1. Direct materials requisitioned during the month:

Job 101 $20,000

Job 102 16,000

Job 103 24,000

$60,000

2. Direct labor incurred and charged to jobs during the month was:

Job 101 $32,000

Job 102 28,000

Job 103 20,000

$80,000

3. Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 75% of direct labor costs.

4. Actual manufacturing overhead costs incurred during the month amounted to $66,000.

5. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed during the month.

Instructions

How much manufacturing overhead was applied to Job 103 during the month?

Compute the unit cost of Jobs 101 and 103.

Instructions are listed below.

Explanation:

Giving the following information:

Direct labor incurred and charged to jobs during the month was:

Job 101 $32,000

Job 103 20,000

Manufacturing overhead was applied to jobs using a predetermined overhead rate based on 75% of direct labor costs.

To apply overhead, we need to use the estimated overhead rate and the actual direct labor cost:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Job 103 = 0.75*20,000 = $15,000

Job 101 = 0.75*32,000 = $24,000

Direct materials requisitioned during the month:

Job 101 $20,000

Job 103 24,000

Job 101 consists of 1,000 units and, Job 103 consists of 200 units.

First, we need to calculate the total cost and then the unitary cost:

Total cost = direct material + direct labor + allocated overhead

Job 101:

TC = 20,000 + 32,000 + 24,000 = $76,000

Unitary cost = 76,000/1,000 = $76

Job 103:

TC = 24,000 + 20,000 + 15,000 = $59,000

Unitary cost = 59,000/200 = $295