On January 1, there were two jobs in process, no. 200 and no. 300. The following
ID: 2511759 • Letter: O
Question
On January 1, there were two jobs in process, no. 200 and no. 300. The following costs were applied to these jobs in the prior year:
Job No.
200
300
Direct material
$ 5,000
$ 8,000
Direct labor
4,000
3,000
Overhead
4,400
3,300
Total
$13,400
$14,300
During January, the following transactions took place:
*
Raw material costing $40,000 was purchased on account.
*
Jobs #424, #525 and #626 were started and the following costs were applied to them:
JOB
424
525
626
Direct materials
$3,000
$10,000
$7,000
Direct labor
5,000
6,000
4,000
*
Job #200 and Job #300 were completed after incurring additional direct labor costs of $2,000 and $4,000, respectively
*
Wages paid to production employees during January totaled $25,000.
*
Depreciation for the month of January totaled $10,000.
*
Utilities bills in the amount of $10,000 were paid for operations during December.
*
Utilities bills totaling $12,000 were received for January operations.
*
Supplies costing $2,000 were used.
*
Miscellaneous overhead expenses totaled $24,000 for January.
Actual overhead is applied to individual jobs at the end of each month using a rate based on actual direct labor costs.
Required:
1
Determine the January overhead rate.
2
Determine the cost of each job.
3
Prepare a statement of cost of goods manufactured.
Job No.
200
300
Direct material
$ 5,000
$ 8,000
Direct labor
4,000
3,000
Overhead
4,400
3,300
Total
$13,400
$14,300
Explanation / Answer
1) overhead rate 4400/4000 110.00% 2) cost of each job 200 300 424 525 626 beginning inventory direct material 5,000 8,000 13,000 direct labor 4,000 3,000 7,000 overhead 4,400 3,300 7,700 total beginning inventory 13,400 14,300 27,700 cost added during the year Direct material 3,000 10,000 7,000 20000 direct labor 2,000 4,000 5,000 6,000 4,000 21,000 overhead 2,200 4,400 5,500 6,600 4,400 23,100 total cost added during the yr 4200 8400 13,500 22,600 15,400 64,100 total cost of job 17,600 22,700 13,500 22,600 15,400 91,800 3) cost of goods manufactured direct materials 40,000 direct labor 25,000 overhead cost depreciation 10,000 utilities bill 12,000 supplies 2,000 miscellaneous overhead 24,000 Total overhead cost 48,000 Total manufacturing cost 113,000 Add:Beginning work in process 27,700 140,700 less:ending work in process 51,500 cost of goods manufactured 89,200