As of the end of June, the job cost sheets at Racing Wheels, Inc., show the foll
ID: 2467370 • Letter: A
Question
As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs. A table shows a job cost sheet for Racing Wheels, Inc. D Job 102 was started in production in May and the following costs were assigned to it in May: direct materials, $6,000; direct labor, $1,800; and overhead, $900. Jobs 103 and 104 are started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 are finished in June, and Job 104 is expected to be finished in July. No raw materials are used indirectly in June. Using this information, answer the following questions. (Assume this company's predetermined overhead rate did not change across these months).
What predetermined overhead rate is used during June?
How much total cost is transferred to finished goods during June?
Explanation / Answer
Direct Materials May June Total Job 102 6000 9000 15000 Job 103 0 33000 33000 (Started in June only) Job 104 0 27000 27000 (Started in June only) Total 6000 69000 75000 Direct Labour Job 102 1800 6200 8000 Job 103 0 14200 14200 (Started in June only) Job 104 0 21000 21000 (Started in June only) Total 1800 41400 43200 Predetermined OH rate used in June= 7100/14200*100 = 50% (same as in May- 4000/8000*100=50%) Total cost transferred to finished goods during June Job 102- 15000+8000+4000= 27000 Job 103- 33000+14200+7100= 54300 81300 Job 104 is expected to be finished in July only
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