Question

Back to the Fuchsia is a Vancouver-based flower shop that produces custom bouquets for special events based on customer specifications.

Back to the Fuchsia uses job-order costing to assign costs to products. On October 1, the company had the following balances recorded:

Raw materials inventory	$9,300
Work in process inventory*	$44,505
Finished goods inventory**	$23,500

* October 1 work in process inventory consisted of three jobs:

	Job 202	Job 204	Job 205
Direct Materials	$4,200	$3,190	$3,800
Direct Labour	$8,500	$7,210	$6,500
Applied Overhead	$4,250	$3,605	$3,250
Total	$16,950	$14,005	$13,550

** October 1 finished goods inventory consisted of Job 203, which had the following costs:

	Job 203
Direct Materials	$8,200
Direct Labour	$10,200
Applied Overhead	$5,100
Total	$23,500

The following jobs were started in October:

	Job 206	Job 207	Job 208	Total
Direct Materials	$4,180	$3,600	$1,200	$8,980
Direct Labour	$9,200	$8,340	$2,910	$20,450

Direct materials and labour added to beginning work in process inventory in October were as follows:

	Job 202	Job 204	Job 205	Total
Direct Materials	$950	$410	$1,200	$2,560
Direct Labour	$2,000	$3,500	$4,500	$10,000

Additional Notes

• Manufacturing overhead is applied at a predetermined overhead rate on the basis of direct labour hours.
• Actual overhead expenses for October were $27,860.
• $10,500 of raw materials were purchased in the month of October.
• On October 31, only Jobs 207 and 208 remain in work in process inventory.
• On October 31, only Job 205 remains in finished goods inventory.
• Assume the remaining jobs have been sold.

Required: ANSWER the following information.

What is the company's predetermined overhead rate as a percentage? (Enter in this format - 25%). Do not enter the % sign as it has already been supplied to you and do not enter a decimal.	%
Determine the total raw materials available for use in October. Do not use $ signs in your final answer.	$
Determine the ending raw materials inventory balance on October 31. Do not use $ signs in your final answer.	$
Determine the total manufacturing overhead applied to work in process in October (Do not include overhead applied prior to October 1. Include any items that were considered work in process sometime in October)? Do not use $ signs in your final answer.	$
What was the total amount of raw materials inventory transferred into work in process inventory in October? Do not use $ signs in your final answer.	$
What is the total cost of raw materials in finished goods inventory at the end of October? Do not use $ signs in your final answer.	$
What is the total cost of direct labour in finished goods inventory at the end of October? Do not use $ signs in your final answer.	$
What is the total cost of Job 204 at the end of October? Do not use $ signs in your final answer.	$
What is the cost of goods sold (COGS) for Job 202 in October? Do not use $ signs in your final answer.	$

Answer 1

1.
Predetermined Overhead rate = $4250 / 8500 = 50% of Direct labor cost

2.
Total Material available for use = $9300+10500 = $19800

3.
Ending Raw Material Inventory Balance = $19800 - 8980 - 2560 = $8260

4.
Total Manufacturing Overhead applied = ($20450+10000) x 50% = $15225

5.
Amount of raw material transferred to work in process = $8980+2560 = $11540

6.
Total cost of raw materials in finished goods inventory at the end of October = $3800+1200 = $5000 i.e. for Job 205

7.
Total cost of direct labour in finished goods inventory at the end of October = $6500+4500 = $11000

8.
Total Cost of Job 204 = $14005+410+3500+3500*50% = $19665

9.
Cost of Goods Sold for Job 202 = $16950+950+2000+2000*50% = $20900