Oriole, Inc. manufactures ergonomically designed computer furniture. Oriole uses

Question

Oriole, Inc. manufactures ergonomically designed computer furniture. Oriole uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs ob No. Item nits Accumulated Cost CC723 Computer caddy 26,000 $910,000 434,000 271,000 $1,615,000 15,000 28,000 CH291 Chair PS812 Printer stand On November 30, Oriole's Raw Materials Inventory account totaled $676,000, and its Finished Goods Inventory totaled $3,466,400. Oriole applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totaled $4,950,000, and the company planned to use 990,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 850,000 machine hours, total manufacturing overhead amounted to $4,284,500, and Cost of Goods Sold was $8,760,250. For the pursposes of this problem, ignore year-end disposition of over/ under applied overhead Oriole purchased $638,000 in raw materials in December and incurred the following costs for jobs in process that month: Materials Machine Direct Labor Direct Labor ob No. CC723 CH291 PS812 DS444 Issued Hours Hours Cost 13,000 4,800 $214,000 20,800 19,000 14,800 3,600 17,300 17,500 $167,000 $123,400 $49,200 $216,500 $143,000 $19,000 $259,000 The following jobs were completed in December and transferred to the Finished Goods Inventory ob No. Units CC723 Computer caddy 26,000 15,000 9,000 Item CH291 Chair DS444 Desk

Explanation / Answer

Solution:

(a).The total cost of each of the four jobs worked on in december:

(b).The total manufacturing cost for december:

(c).The cost of goods manufactured for december:

(d). The balance in the work in process inventory account on dec 31:

Working notes:

(a).

Predetermined overhead rate:

Estimated overhead for the year 4950000

Estimated total machine hour for the year 990000

Overhead rate per machine hour = 5

Machine hours and overhead applied to jobs:

(b).  

(c).

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CC723 CH291 PS812 DS444 Total cost $1265400 $526200 $805500 $497000

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