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: Materials Inventory Work-in-Process Inventory Finished Goods Inventory Work-in-process inventory is made up of three jobs with the following costs: $12,730 21,340 8,700 Direct materials Direct labor Applied overhead Job 114 $2,411 1,800 1,170 Job 115 $2,640 1,560 1,014 Job 116 $3,650 4,300 2,795 During April, Sangvikar experienced the transactions listed beloww a. Materials purchased on account, $29,000 b. Materials requisitioned: Job 114, $16,500; Job 115, $12,200; and Job 116, $5,000 c. 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 d. Overhead is applied on the basis of direct labor cost. e. Actual overhead was $4,415 f. Job 115 was completed and transferred to the finished goods warehouse g. Job 115 was shipped, and the customer was billed for 125 percent of the cost.

Explanation / Answer

1) Predetermined overhead rate Job114 Job115 Job116 Direct Labor (a) 1800 1560 4300 Applied overhead (b) 1170 1014 2795 Predetermined overhead rate = Overhead Cost/ Direct labor Cost = b/a*100 65% 65% 65% 2) Ending Balance Job114 Job115 Job116 Beginning balance (WN-1) $    5,381.00 $    5,214.00 $ 10,745.00 Material $ 16,800.00 $ 12,460.00 $    5,410.00 Direct Labor $    1,870.00 $    2,800.00 $    1,900.00 (170*11) (200*14) (100*19) Overhead 65% of direct labor $    1,215.50 $    1,820.00 $    1,235.00 Total $ 25,266.50 $ 22,294.00 $ 19,290.00 Less: Finished goods $                 -   $ 22,294.00 $                 -   Ending Balance $ 25,266.50 $                 -   $ 19,290.00 WN-1 Job 114 Job 115 Job 116 Direct materials $    2,411.00 $    2,640.00 $    3,650.00 Direct labor $    1,800.00 $    1,560.00 $    4,300.00 Applied overhead $    1,170.00 $    1,014.00 $    2,795.00 Beginning balance $    5,381.00 $    5,214.00 $ 10,745.00 3) Ending balance of WIP as of April 30 Job 114 Job 116 Total Ending Balance $ 25,266.50 $ 19,290.00 $ 44,556.50 4) Cost of goods sold for April Cost of goods sold for Job 115 = $22,294 5) Price of job 115 sold during April = Cost of finished goods*125% = $22,294*125% =$27867.50

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