Answer:(1) $1.3 per direct labour cost, (2) $15,360,000 (3) ($82,200) (4) $11,957,000, it is appropriate to include selling and administrative expenses in the cost of good sold because it is the cost incurred when the goods were sold.
Explanation:
Budgeted Manufacturing overhead Cost / Budgeted Total unit in the Allocation Base
= 5,460,000 /4,200,000
= $1.3 per direct labour cost
To calculate the addition to work in process inventory
$
Raw materials. 5,550,000
Direct Labour. 4,350,000
Allocated manufacturing overhead 5,460,000
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Work in process inventory. 15,360,000
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calculate the addition to work in process inventory
$
Beginning work in process inventory. 156,800
Job no 2143 (Direct materials $154,000, Direct Labour $85,000,) 239,000
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Finished good Inventory (job no 2077) (82,200)
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To calculate the over applied overhead or under applied overhead
POAR = Budgeted Manufacturing overhead / Budgeted Direct Labour
= 5,460,000/ 4,200,000
= $1.3 per direct labour × actual activity
= 1.3 × 4,350,000 = 5,655,000
Overhead absorbed = 5,655,000
Actual Overhead incurred - Overhead Absorbed
= 17,612,000 - 5,655,000
= $11,957,000
It is appropriate to include selling and administrative expenses in the cost of good sold category because it is the cost incurred when the goods were sold.
