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Chapter 4 Exercise 7
7. Overhead application: Working backward
The Towson Manufacturing Corporation applies overhead on the basis of
machine hours. The following divisional information is presented for your review:
|Division A |Division B | |Actual machine hours |22,500 |? | |Estimated machine
hours |20,000 |? | |Overhead application rate |$4.50 |$5.00 | |Actual overhead
|$110,000 |? | |Estimated overhead |? |$90,000 | |Applied overhead |? |
$86,000 | |Over- (under-) applied overhead
Division A:
Estimated Overhead = Estimated Machine Hours * Overhead Application Rate
Estimated Overhead = 20,000 * $4.50
Estimated Overhead
$90,000.00
Applied Overhead = Actual Machine Hours * Overhead Application Rate
Applied Overhead = 22,500 * $4.50
Applied Overhead
$101,250.00
Under Applied Overhead = Applied Overhead - Actual Overhead
Under Applied Overhead = $101,250 - $110,000
Under Applied Overhead
-$8,750.00 |? |$6,500 | |Find the unknowns for each of the divisions.
Chapter 4 Problem 2
2. Computations using

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a job order system
General Corporation employs a job order cost system. On May 1 the following
balances were extracted from the general ledger;
Work in process $ 35,200
Finished goods 86,900
Cost of goods sold 128,700
Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103 ($14,800).
During May, direct materials requisitioned from the storeroom amounted to $96,500,
and direct labor incurred totaled $114,500. These figures are subdivided as follows:
Direct Materials
Direct Labor
Job No.
Amount
Job No.
Amount
101

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