Answer:
Solution 1 : Total Manufacturing Cost of Job S is $434,847.5 while for Job T is $ 392,247.5
Solution 2 : The amount of overheads has been over-applied and the Cost of Goods Sold will decrease by $94,695
Explanation:
<u>Solution 1</u>
Particulars Job S ($) Job T ($)
Direct material 47,700 113,450
Direct labor 64,500 54,000
Overhead Applied (Hours* $51.50) 322,647.5 224,797.5
Total manufacturing cost 434,847.5 392,247.5
<u>Solution 2</u>
In order to calculate the amount of over-applied or under-applied, we will take the difference between the overheads applied and the actual overheads incurred during the period. If the applied overheads are more than the actual then the amount has been over-applied and the Cost of Goods Sold will decrease. However, in case the overheads were under-applied then the Cost of Goods Sold would increase. The calculation has been done below:
Actual Overhead = $86,250 + $215,500 + $151,000 = $452,750
Applied overhead = 322,647.5 + 224,797.5 = $547,445
Over-applied/Under-applied overhead = Applied overhead - Actual Overhead
547,445 - 452,750 = $94,695. The overheads has been over-applied.
Cost of Goods Sold account will be decreased by $94,695.
