Exercise 2-3 Analysis of cost flows LO C2
As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.
Job 102 | Job 103 | Job 104 | |||||||
Direct materials | $ | 25,000 | $ | 48,000 | $ | 64,000 | |||
Direct labor | 13,000 | 26,900 | 39,000 | ||||||
Overhead applied | 4,810 | 9,953 | 14,430 | ||||||
Job 102 was started in production in May and the following costs
were assigned to it in May: direct materials, $12,000; direct
labor, $3,800; and overhead, $1,406. Jobs 103 and 104 were started
in June. Overhead cost is applied with a predetermined rate based
on direct labor cost. Jobs 102 and 103 were finished in June, and
Job 104 is expected to be finished in July. No raw materials were
used indirectly in June. Using this information, answer the
following questions. (Assume this company’s predetermined overhead
rate did not change across these months.)
1&2. Complete the table below to calculate the
cost of the raw materials requisitioned and direct labor cost
incurred during June for each of the three jobs?
3. Using the accumulated costs of the jobs, what
predetermined overhead rate is used?
4. How much total cost is transferred to finished
goods during June?
Answer 1&2
Direct Materials | |||
Job | May | June | Total |
102 | 12000 | 13000 | 25000 |
103 | 48000 | 48000 | |
104 | 64000 | 64000 | |
Total | 12000 | 125000 | 137000 |
Direct Labor | |||
Job | May | June | Total |
102 | 3800 | 9200 | 13000 |
103 | 26900 | 26900 | |
104 | 39000 | 39000 | |
Total | 3800 | 75100 | 78900 |
Answer 3
predetermined overhead rate is used for job 102
Overhead Rate | |||||
Choose Numerator | / | Choose Denominator | = | Overhead Rate | |
Overhead Costs | / | Direct labor Costs | = | Overhead Rate | |
4810 | / | 13000 | = | 37% |
Answer 4
Job | Direct Materials | Direct Labor | Applied Overhead | Total cost | Cost Transferred to Finished Goods |
102 | 25000 | 13000 | 4810 | 42810 | 42810 |
103 | 48000 | 26900 | 9953 | 84853 | 84853 |
104 | 64000 | 39000 | 14430 | 117430 | 0 |
Total | 137000 | 78900 | 29193 | 245093 | 127663 |
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