David Systems manufactures automated test systems that perform quality inspectio

Question

David Systems manufactures automated test systems that perform quality inspections during and at the completion of the manufacturing process. As most manufacturing processes are unique, David's test equipment is designed to customer specifications, and each system has a selling price in excess of $300,000. The company uses a job-order cost system based on the full absorption of actual costs and applies overhead on the basis of machine hours using a predetermined overhead rate. For the fiscal year ended November 30 budgeted manufacturing overhead was $1,960,000, and the expected activity level was 98,000 machine hours. Data regarding several jobs at David are presented below.
By the end of November all jobs but RX-115 were completed, and all completed jobs had been delivered to customers with the exception of SL-205.

Balance 10/31 Direct Materials Direct Labor Machine Hours

Job No.

XJ-107 118,600 4000 8400 150

ST-211 121,450 2500 12,160 300

XD-108 21,800 86,400 36,650 3100

SL-205 34,350 71,800 32,175 2700

RX-115 18,990 21,845 1400

Required:
(a) Determine the balance in the Finished Goods Inventory on November 30.
(b) Compute the cost of goods manufactured for November.
(c) Compute the Cost of Goods Sold for November.
(d) Determine the balance in Work-In-Process Inventory on November 30.

Explanation / Answer

: Beginning balance 34,350 November

======================================================================================================================================================charges to Job:

======================================================================================================================================================Direct materials 71,800

======================================================================================================================================================Direct labor 32,175

======================================================================================================================================================Manufacturing overhead applied 54,000

======================================================================================================================================================Ending balance 192,325

=====================================================================================================================================================

B: Cost of Goods Manufactured =134000 +142110+206850+192325 = 675285

=====================================================================================================================================================

======================================================================================================================================================C) Cost of Good Sold = 675285 - 192325 = $482960

======================================================================================================================================================D) Balance in WIP =18990+21845+28000 = $68835

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