system DATA: Targon, Inc., manufactures lawn equipment. A job-order costing is u
ID: 2609865 • Letter: S
Question
system DATA: Targon, Inc., manufactures lawn equipment. A job-order costing is used, since the products are manufactured in batches rather than on a continuous basis. The company started operations on January 1, 2016. Operating activities during the first 11 months of the year (through November 30) resulted in the following balances in selected accounts: RAW MATERIALS Dr. Cr. Balance 11/30/2016 36,000 MANUFACTURING OVERHEAD Dr. Cr. 2,260,000 Balance 12/31/2016? WORK IN PROCESS Dr. Cr. Balance 11/30/2016 1,210,000Explanation / Answer
Schedules to report manufacturing cost to management:
We can develop two schedules first will be work in progress and the second one will be finished goods inventory schedule:
Let us start with Work in progress schedule:
Estate
Economy
Deluxe
Brass
Rainmaker
Connectors
Ring
Work in Process, Beginning
710,000
490,000
Add:
Direct Material
210,000
6,000
92,000
181,000
163,000
Direct Labor
62,000
26,000
5,000
182,000
52,000
Manufacturing Overhead
36,000
15,000
3,000
108,000
30,000
Total Cost to Account For
1,018,000
537,000
100,000
-
471,000
-
245,000
Total Goods Transferred to FGI
1,018,000
537,000
471,000
245,000
Work in Process, Ending
100,000
Number Goods Transferred
50,000
40,000
30,000
50,000
Unit Cost
$ 20.360
$ 13.425
$ 15.700
$ 4.900
Finished goods inventory:
Inventory
Sold Under LIFO
Remaining Units
No. of Units
Unit Cost
No. of Units
Unit Cost
No. of Units
Unit Cost
Total Cost
Estate
Beginning Balance
5,000
$ 22.00
5,000
$ 22.00
$ 110,000.00
Goods Transferred
50,000
$ 20.36
16,000
$ 20.36
34,000
$ 20.36
$ 692,240.00
$ 802,240.00
Deluxe
Beginning Balance
115,000
$ 17.00
32,000
$ 17.00
83,000
$ 17.00
$ 1,411,000.00
Goods Transferred
Brass
Beginning Balance
10,000
$ 14.00
5,000
$ 14.00
5,000
$ 14.00
$ 70,000.00
Goods Transferred
Rainmaker
Beginning Balance
5,000
$ 16.00
5,000
$ 16.00
$ 80,000.00
Goods Transferred
30,000
$ 15.70
10,000
$ 15.70
20,000
$ 15.70
$ 314,000.00
$ 394,000.00
Connectors
Beginning Balance
100,000
$ 5.00
26,000
$ 5.00
74,000
$ 5.00
$ 370,000.00
Goods Transferred
Economy
Beginning Balance
Goods Transferred
40,000
$ 13.43
20,000
$ 13.43
20,000
$ 13.43
$ 268,500.00
Ring
Beginning Balance
Goods Transferred
50,000
$ 4.90
22,000
$ 4.90
28,000
$ 4.90
$ 137,200.00
Therefore, Balance of finished goods inventory as on December 31 (by using LIFO)
Estate
$ 802,240.00
Economy
$ 268,500.00
Deluxe
$1,411,000.00
Brass
$ 70,000.00
Rainmaker
$ 394,000.00
Connectors
$ 370,000.00
Ring
$ 137,200.00
Estate
Economy
Deluxe
Brass
Rainmaker
Connectors
Ring
Work in Process, Beginning
710,000
490,000
Add:
Direct Material
210,000
6,000
92,000
181,000
163,000
Direct Labor
62,000
26,000
5,000
182,000
52,000
Manufacturing Overhead
36,000
15,000
3,000
108,000
30,000
Total Cost to Account For
1,018,000
537,000
100,000
-
471,000
-
245,000
Total Goods Transferred to FGI
1,018,000
537,000
471,000
245,000
Work in Process, Ending
100,000
Number Goods Transferred
50,000
40,000
30,000
50,000
Unit Cost
$ 20.360
$ 13.425
$ 15.700
$ 4.900
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