?Serial Problem Success Systems Serial Problem Success Systems LO P1, P2, P3 The
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?Serial Problem Success Systems
Serial Problem Success Systems LO P1, P2, P3 The computer workstation furniture manufacturing that Adria Lopez started in January is progressing well As of the end of June, Success Systems' job cost sheets show the following total costs accumulated on three furniture jobs, Direct materials Direct labor Overhead Job 6.02 Job 6.03 Job 6.04 $1,700 3,700 $2,900 2,200 1,100 700 350 1,320 660 Job 6.02 was started in production in May, and these costs were assigned to it in May: direct materials, $600; direct labor, $170; and overhead, $85. Jobs 6.03 and 6.04 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 6.02 and 6.03 are finished in June, and Job 6.04 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company's predetermined overhead rate did not change over these months) Required. 1. What is the cost of the raw materials used in June for each of the three jobs and in total? Job 6.02 Job 6.03 Job 6.04 Total May costs June costs TotalExplanation / Answer
Job 6.02
Costs
May
June
Total
Direct Material
600
1,100
1,700
Direct Labor
170
530
700
Overhead
85
265
350
Total
855
1,895
2,750
Job 6.02
Job 6.03
Job 6.04
Total
May Costs
600
0
0
600
June costs
1,100
3,700
2,900
7,700
Total
1,700
1,895
0
8,300
2.Total Direct labor cost incurred in June
Job 6.02
Job 6.03
Job 6.04
Total
May Costs
170
0
0
170
June costs
530
1,320
2,200
4,050
Total
700
1,320
2,200
4,220
3.Pre-determined Overhead Rate
Labor and Overhead Cost
Job 6.02
Job 6.03
Job 6.04
Total
Labor cost
700
1,320
2,200
4,220
Overheads
350
660
1,100
2,110
Total
1,050
1,980
3,300
6,330
Therefore, Overhead is 50% of labor cost
Overhead rate = 2,110/4,220 = $0.5 of labor cost
Raw Material
Direct Labor
Overhead applied
Total Cost
Cost transferred to finished goods
Cost of Ending GIP
Job 6.02
1,700
700
350
2,750
2,750
Job 6.03
3,700
1,320
660
5,680
5,680
Job 6.04
2,900
2,200
1,100
6,200
6,200
Costs
May
June
Total
Direct Material
600
1,100
1,700
Direct Labor
170
530
700
Overhead
85
265
350
Total
855
1,895
2,750
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