answer a, b and c O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit

answer a, b and c O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit is built to customer specifications). O’Leary uses a normal job costing system. Direct labor at O’Leary is paid $29 per hour, but the employees are not paid if they are not working on jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows. Year 1 Year 2 Direct labor-hours worked 69,400 56,400 Manufacturing overhead costs incurred Indirect labor $ 2,856,000 $ 2,256,000 Employee benefits 1,041,000 846,000 Supplies 694,000 564,000 Power 651,000 546,000 Heat and light 142,800 142,800 Supervision 783,210 663,450 Depreciation 2,054,500 2,054,500 Property taxes and insurance 799,490 823,250 Total manufacturing overhead costs $ 9,022,000 $ 7,896,000 At the beginning of year 3, O’Leary has two jobs, which have not yet been delivered to customers. Job MC-270 was completed on December 27, year 2. It is scheduled to ship on January 7, year 3. Job MC-275 is still in progress. For the purpose of computing the predetermined overhead rate, O’Leary uses the previous year’s actual overhead rate.  Data on direct material costs and direct labor-hours for these jobs in year 2 follow. Job MC-270 job mc 275 Direct material costs $ 272,400 $ 497,400 Direct labor-hours 2,620 hours 3,320 hours During year 3, O’Leary incurred the following direct material costs and direct labor-hours for all jobs worked in year 3, including the completion of Job MC-275. Direct material costs $ 11,842,400 Direct labor-hours 76,400 Actual manufacturing overhead $ 9,696,000 At the end of year 3, there were four jobs that had not yet shipped. Data on these jobs follow. MC-389 MC-390 MC-397 MC-399 Direct materials $45,600 $69,400 $105,900 $31,300 Direct labor-hours 1,764 hours 2,820 hours 6,220 hours 1,420 hours Job status Finished Finished In progress In progress Required: a. was the amount in the beginning Finished Goods and beginning Work-in-Process accounts for year 3? b. O’Leary incurred direct materials costs of $59,400 and used an additional 540 hours in year 3 to complete job MC-275. was the final (total) cost charged to job MC-275? c. was over- or underapplied overhead for year 3?

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