Kirpalani Stores manufactures customized household furnishings. The company uses a perpetual inventory system and has a highly labour-intensive production process, so it assigns manufacturing overhead based on direct labour cost. Kirpalani expects to incur $2,205,000 of manufacturing overhead costs and estimated direct labour costs of $3,150,000 during 2019. At the end of December 2018, Kirpalani reported work in process inventory (Job 551) of $93,000 The following events occurred during January 2019. i) Purchased materials on account, $392,000. ii) Incurred manufacturing wages of $400,000 iii) Requisitioned direct materials and used direct labour in manufacturing. Direct materials Direct labour Job 551 $70,200 $61,200 Job 552 97,500 115,600 Job 553 105,300 78,200 Job 554 117,000 85,000 iv) Issued indirect materials to production, $30,000. v) Charged indirect manufacturing wages to production, $60,000. vi) Depreciation of production machinery, $85,000 vii) Other manufacturing overhead costs incurred on units 551 to 554 amounted to $49,000. viii)Allocated overheads to jobs at the predetermined rate ix) Units completed: 551, 552 & 554. x) Sold units 551 & 554 (billed customers at a margin of 33⅓% on sales) Required: (a) Compute Kirpalani’s predetermined manufacturing overhead rate for 2019.
Kirpalani Stores manufactures customized household furnishings. The company uses a perpetual inventory
system and has a highly labour-intensive production process, so it assigns manufacturing overhead based
on direct labour cost. Kirpalani expects to incur $2,205,000 of
direct labour costs of $3,150,000 during 2019.
At the end of December 2018, Kirpalani reported work in process inventory (Job 551) of $93,000
The following events occurred during January 2019.
i) Purchased materials on account, $392,000.
ii) Incurred manufacturing wages of $400,000
iii) Requisitioned direct materials and used direct labour in manufacturing.
| Direct materials | Direct labour | |
| Job 551 | $70,200 | $61,200 |
| Job 552 | 97,500 | 115,600 |
| Job 553 | 105,300 | 78,200 |
| Job 554 | 117,000 | 85,000 |
iv) Issued indirect materials to production, $30,000.
v) Charged indirect manufacturing wages to production, $60,000.
vi) Depreciation of production machinery, $85,000
vii) Other manufacturing overhead costs incurred on units 551 to 554 amounted to $49,000.
viii)Allocated overheads to jobs at the predetermined rate
ix) Units completed: 551, 552 & 554.
x) Sold units 551 & 554 (billed customers at a margin of 33⅓% on sales)
Required:
(a) Compute Kirpalani’s predetermined manufacturing overhead rate for 2019.
Step by step
Solved in 3 steps
Calculate the total
by Bartleby ExpertCalculate the total
by Bartleby ExpertCalculate the total
by Bartleby ExpertCalculate the total manufacturing costs for each job.
by Bartleby ExpertCalculate the total
by Bartleby Expert
