General Corporation employs a job order cost system. On May 1 the following bala
ID: 2623690 • Letter: G
Question
General Corporation employs a job order cost system. On May 1 the following balances were extracted from the general ledger;
Work in process $ 35,200
Finished goods 86,900
Cost of goods sold 128,700
Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103 ($14,800). During May, direct materials requisitioned from the storeroom amounted to $96,500, and direct labor incurred totaled $114,500. These figures are subdivided as follows:
Direct Materials
Direct Labor
Job No.
Amount
Job No.
Amount
101
$5,000
101
$7,800
115
19,500
103
20,800
116
36,200
115
42,000
Other
35,800
116
18,000
$96,500
Other
25,900
$114,500
Job no. 115 was the only job in process at the end of the month. Job no. 101 and three "other" jobs were sold during May at a profit of 20% of cost. The "other" jobs contained material and labor charges of $21,000 and $17,400, respectively.
General applies overhead daily at the rate of 150% of direct labor cost as labor summaries are posted to job orders. The firm's fiscal year ends on May 31.
Instructions:
Direct Materials
Direct Labor
Job No.
Amount
Job No.
Amount
101
$5,000
101
$7,800
115
19,500
103
20,800
116
36,200
115
42,000
Other
35,800
116
18,000
$96,500
Other
25,900
$114,500
Explanation / Answer
Solution: Computation of the total overhead applied to production during May
Total overhead applied = 114500 x 1.50 = $171,750
Solution: Computation of the cost of the ending work in process inventory
Cost of ending work in process inventory = 21000 + 17400 + (17400 x 1.50)
Cost of ending work in process inventory = 21000 + 17400 + 26100 = $64,500
Solution: Computation of the cost of jobs completed during May
Cost of jobs completed during May = 35200 + 96500 + 114500 + 171750
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