During the month of January, the materials requisitions and direct labor time ti

Question

During the month of January, the materials requisitions and direct labor time tickets showed the following information:

Date Job Number Materials Used

1/1 George-1 $13,200

1/6 Builder-35 37,250

1/15 George-1 8,700

1/22 Stephen-63a 23,750

Date Job Number DL Hours

1/2 George-1 65

1/9 Builder-35 17

1/16 George-1 36

1/16 Stephen-63a 18

1/30 Stephen-63a 29

Compute the costs incurred for the month on each job. Use the DL average rate of $45 per hour and the overhead allocation rate of 150% of DL cost. Remember that the cost of any job is DM+DL+OH. Note that George-1 was started and completed, Builder-35 was started but not yet completed, and Stephen-63a was completed and shipped by the end of the month.

a. Job Stephen-63a, total costs =

b. The Stephen-63a job was a rush job, so the company will markup accordingly. If the company prices this job at 200% of cost, what will job Stephen-63a be sold for?

c. What is the balance in work in process inventory at the end of the month?

Explanation / Answer

Solution:

a. Job Stephen-63a Total Cost = $29,037.50

b. If stephen-63a job priced at 200% of cost then sale value of Stephen-63a = $29,037.50 *200% = $58,075

c. The builder-35 job was started in january but not yet completed, therefore cost of builder-35 incurred till date will be the balance in WIP inventory at the end of the month = $39,162.50

Computation of cost incurred for the month on each job Particulars George - 1 Builder - 35 Stephen - 63a Material used $21,900.00 $37,250.00 $23,750.00 Direct Labor hours 101 17 47 Direct labor average rate per hour $45.00 $45.00 $45.00 Direct Labor cost incurred (DL Hours * Average Rate) $4,545.00 $765.00 $2,115.00 Overhead Allocation (150% of direct labor cost) $6,817.50 $1,147.50 $3,172.50 Total Cost (Material + Direct Labor + Overhead) $33,262.50 $39,162.50 $29,037.50

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