Question

The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs.

	Job 602					Job 603					Job 604
Direct materials		$	1,500				$	3,300				$	2,700
Direct labor			800					1,420					2,100
Overhead			400					710					1,050

Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $600; direct labor, $180; and overhead, $90. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company’s predetermined overhead rate did not change over these months.)

1. Find the cost of ending WIP

Answer 1

Job 602 and 603 were completed in June. Only Job 604 is in work in process inventory at the end of June . Thus, cost of ending work in process will consist of the expenses incurred on Job 604.

Cost of ending work in process = Direct material of Job 604 + Direct labor of Job 604 + Overhead of Job 604

= 2,700 + 2,100 + 1,050

= $5,850

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