Mighty Mullets makes mullet wigs for the follically challenged. Each wig job is

Question

Mighty Mullets makes mullet wigs for the follically challenged. Each wig job is unique. In April 2014, it completed all outstanding orders, and then, in May 2014, it worked on only 2 jobs: Z1 & Z2.

Mighty Mullets, May 2014

Job Z1

Job Z2

DM

$78,000

$51,000

Direct Manufacturing Labor

273,000

208,000

Direct manufacturing labor is paid at the rate of $26 per hour. Manufacturing OH costs are allocated at a budgeted rate of $20 per direct manufacturing labor hour. Only Job Z1 was completed in May.

Required:

a) a) Calculate the total cost for Job Z1.

b) b) 1,100 wigs were produced for Job Z1. Calculate the cost per wig.

c) c) Prepare the journal entry transferring Job Z1 to finished goods.

d) d) What is the ending balance in the WIP control account?

Mighty Mullets, May 2014

Job Z1

Job Z2

DM

$78,000

$51,000

Direct Manufacturing Labor

273,000

208,000

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Total Cost for Job Z1

Part B:

Cost Per Wig = Total Cost for Job Z1/Units Produced = 561000/1100 = $510 per wig

Part C:

Finished Goods Dr. 561000

Work in Process - Job Z1 Cr. 561000

(Being the value of Completed Job Z1 units transferred to Finished Goods)

Part D:

Ending Balance of WIP Control Account (Only Job Z2) = 51000 (Direct Material) + 208000 (Direct Labor) + 208000/26*20 (Manufacturing Overhead) = 419000

Notes:

Manufacturing Overhead Costs for Job Z1 = Direct Labor Hours*Manufacturing Overhead Rate = 273000/26*20 = 210000

Manufacturing Overhead Costs for Job Z1 = Direct Labor Hours*Manufacturing Overhead Rate = 208000/26*20 = 160000

Thanks.

Mighty Mullets, May 2014 Job Z1 DM 78000 Direct Manufacturing Labor 273000 Manufacturing Overhead Costs 210000 Total Cost 561000

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