Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost On April

Question

Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost On April 1, Sangvikar Company had the following balances in its inventory accounts: Materials Inventory Work-in-Process Inventory Finished Goods Inventory Work-in-process inventory is made up of three jobs with the following costs: $12,730 21,340 8,700 Direct materials Direct labor Applied overhead Job 114 $2,411 1,800 1,170 Job 115 $2,640 1,560 1,014 Job 116 $3,650 4,300 2,795 During April, Sangvikar experienced the transactions listed beloww a. Materials purchased on account, $29,000 b. Materials requisitioned: Job 114, $16,500 Job 115, $12,200; and Job 116, $5,000 c. Job tickets were collected and summarized: Job 114, 150 hours at $12 per hour; Job 115, 220 hours at $14 per hour; and Job 116, 80 hours at $18 per hour d. Overhead is applied on the basis of direct labor cost. e. Actual overhead was $4,415 f. Job 115 was completed and transferred to the finished goods warehouse g. Job 115 was shipped, and the customer was billed for 125 percent of the cost.

Explanation / Answer

Req 1: OH applied in Job 1170 Divide: Direct labour cost 1800 Pre-determined OH rate 65% of direct labour cost Req 2: Job 114 Job 115 Job 116 Beginning cost 5381 5214 10745 Add: Current cost Material 16500 12200 5000 Labour 1800 3080 1440 OH applied 1170 2002 936 Total cost of Jobs 24851 22496 18121 Rreq 3: Ending WIP: Job 114 24851 Job 116 18121 Ending WIP: 42972 Req 4: Cost of Good ssold (Job 115): 22496 Req 5: Job 115 sales price: Total cost 22496 Add: Markup @ 25% 5624 Sales price 28120

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