Garoin, inc uses a job order costing system for is products, whwch pass from the

Question

Garoin, inc uses a job order costing system for is products, whwch pass from the Mechining Deparement, o the Assembly Department, so inished-goods iImventory The Machining Department is heavily auomated, in conerast, the Assembly olowing informeson reloies to the yeer just ended Deperment pertoms a number of manuali-assembly actvees The compeny applies manfectuning averhead using machine hours in the Machening Depertment and direct ksbor cost in the Assembly Deparment. The practical capacity 1500000 5600,000 1450000 5780,00o Budgeted machine hours (based on 400000 00,000 425.000 o.000 data thest folow pertain to job no TiS, the ony job in producion et yeer end 25,500 27900 6600 500 Machine hours Seling and admnistrenve expense amounted to $2,500 000 Compute the cost of the company's year end work-in process imventory

Explanation / Answer

Direct labor cost for Assembly department is not clearly apprearing. i have considered $58,500

Cost of year end work in process inventory = $153,690 Explanation: Cost of the company's Year end work in process inventory Job No.775, the job in production at year end Machining Department Assembly Department Total Direct Material 25500 6600 32100 Direct labor 27900 58500 86400 Manufacturing overhead 3600 31590 35190 (Refer Note) (360 hours * $10 ) ($58,500 *$ 0.54) Total 57000 96690 153690 Note: Machining Department Manufacturing overhead rate Budgeted manufacturing overhead/ Budgeted machine hours =4000000/400000 = 10 per machine hour Assembly Department Manufacturing overhead rate Budgeted manufacturing overhead/ Budgeted direct labor cost =3,024,000/5,600,000 = 0.54 per $ of direct labor cost

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