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:

Work-in-process inventory is made up of three jobs with the following costs:

During April, Sangvikar experienced the transactions listed below.

Materials purchased on account, $29,000.

Materials requisitioned: Job 114, $16,500; Job 115, $12,200; and Job 116, $5,000.

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.

Overhead is applied on the basis of direct labor cost.

Actual overhead was $4,415.

Job 115 was completed and transferred to the finished goods warehouse.

Job 115 was shipped, and the customer was billed for 125 percent of the cost.

Required:

1. Calculate the predetermined overhead rate based on direct labor cost.

% of direct labor cost

2. Calculate the ending balance for each job as of April 30.

3. Calculate the ending balance of Work in Process as of April 30.

$

4. Calculate the cost of goods sold for April.

$

5. Assuming that Sangvikar prices its jobs at cost plus 25 percent, calculate the price of the one job that was sold during April.

Ending Balance Job 114 $ Job 115 $ Job 116 $ Materials Inventory Work-in-Process Inventory Finished Goods Inventory $12,730 21,340 8,700

Explanation / Answer

Solution-1

Predetermined overhead rate =  Applied Overhead / Direct Labor

Predetermined overhead rate = $1,170/ 1,800

Predetermined overhead rate =65% direct labor cost

Solution-2

Solution-3

Ending Work in Process (Jobs 114 and 116)

Solution-4

Job 115 = $22,496

So, Cost of Goods Sold (April) = $22,496

Solution-5

Price (Job 115) = $22,496*125%

Price (Job 115) = $28,120

Job 114 Job 115 Job 116 Balance, April 1 $5,381 $5,214 $10,745 Direct Material 16,500 12,200 5,000 Direct Labor 1,800 3,080 1,440 Applied Oerhead 1,170 2,002 936 Total $24,851 $22,496 $18,121

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