<p>P 8. Laurence Norton is the chief financial officer of Rotham Industries, a c

Question

<p>P 8. Laurence Norton is the chief financial officer of Rotham Industries, a company that makes special-order sound systems for home theaters. His records for February revealed the following information:<br /><br />Beginning inventory balances<br /> Materials Inventory $27,450<br /> Work in Process Inventory 22,900<br /> Finished Goods Inventory 19,200<br />Direct materials purchased and received<br /> February 6 $ 7,200<br /> February 12 8,110<br /> February 24 5,890<br />Direct labor costs<br /> February 14 $13,750<br /> February 28 13,230<br />Direct materials requested for production<br /> February 4 $ 9,080<br /> February 13 5,940<br /> February 25 7,600<br /> View PDF<br /><br />Job order cost cards for jobs in process on February 28 had the following totals:<br /><br />Job No. Direct Materials Direct Labor Overhead<br />AJ-10 $3,220 $1,810 $2,534<br />AJ-14 3,880 2,110 2,954<br />AJ-15 2,980 1,640 2,296<br />AJ-16 4,690 2,370 3,318<br /> View PDF<br /><br />The predetermined overhead rate for the month was 140 percent of direct labor costs. Sales for February totaled $152,400, which represented a 70 percent markup over the cost of production.<br /><br />Required<br /><br />Using T accounts for Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Overhead, Accounts Receivable, Payroll Payable, Sales, and Cost of Goods Sold, reconstruct the transactions in February.<br />Compute the cost of units completed during the month.<br />What was the total cost of goods sold during February?<br />Determine the ending balances in the inventory accounts.<br />During the first week of March, Jobs AJ-10 and AJ-14 were completed. No additional direct materials costs were incurred, but Job AJ-10 needed $720 more of direct labor, and Job AJ-14 needed an additional $1,140 of direct labor. Job AJ-10 was 40 units; Job AJ-14, 55 units. Compute the product unit cost for each completed job (round to two decimal places).</p>

Explanation / Answer

2 $76470 See WIP of FG T account

3 $89647 see FG or COGS T account

4. Closing balance of respective inventory has been given in attached T accounts

5 AJ 10 Opening Balance on Mar 1 $7564 + 720+ (720x1.4) = 9292/40 = $232.3

AJ 14 Opening Balance on Mar 1 $8944 + 1140 +(1140x1.4)= 11680/55 = $212.36

Materials Inventory Dr. Cr. Date Details Amount Date Details Amount 1-Feb opening balance 27450 4-Feb DM Used 9080 6-Feb 7200 13-Feb DM used 5940 12-Feb 8110 25-Feb DM used 7600 24-Feb 5890 28-Feb Closing Balance 26030 48650 48650 WIP Inventory Dr. Cr. Date Details Amount Date Details Amount 1-Feb opening balance 22900 28-Feb job Aj 10 7564 4-Feb DM Used 9080 28-Feb job Aj 14 8944 13-Feb DM used 5940 28-Feb job Aj 15 6916 14-Feb Direct Labor 13750 28-Feb job Aj 16 10378 25-Feb DM used 7600 28-Feb Direct Labor 13230 28-Feb 140% of DL 26980x1.4 37772 28-Feb Goods Completed 76470 110272 110272 Finished Goods Inventory Dr. Cr. Date Details Amount Date Details Amount 1-Feb opening balance 19200 28-Feb Cost of goods sold 89647 28-Feb Goods Completed 76470 28-Feb Closing Balance 6023 95670 95670 overhead Dr. Cr. Date Details Amount Date Details Amount 28-Feb 140% of DL 26980x1.4 37772 Account Receivable Dr. Cr. Date Details Amount Date Details Amount 28-Feb Sales 152400 Factory Payroll Dr. Cr. Date Details Amount Date Details Amount 14-Feb Direct Labor 13750 28-Feb Direct Labor 13230 Sales Dr. Cr. Date Details Amount Date Details Amount 28-Feb A/R 152400 Cost of goods sold Dr. Cr. Date Details Amount Date Details Amount 28-Feb Finished Goods sold 89647

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