Question

Serial Problem Business Solutions LO P1, P2, P3

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				$	3,500				$	2,800
Direct labor			900					1,600					1,900
Overhead			450					800					950

How much total direct labor cost is incurred in June?

	Job 602	Job 603	Job 604	Total
May costs
June costs
Total

Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $800; direct labor, $150; and overhead, $75. 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.)

Required:
1. What is the cost of the raw materials used in June for each of the three jobs and in total?
2. How much total direct labor cost is incurred in June?
3. What predetermined overhead rate is used in June?
4. How much cost is transferred to finished goods inventory in June?

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3
• Required 4

How much cost is transferred to finished goods inventory in June?

Job	Raw Materials	Direct Labor	Overhead Applied	Total Cost	Cost transferred to finished goods	Costs of Ending WIP
602
603
604
Total

Answer 1

1.

	Job 602	Job 603	Job 604	Total
Direct materials	1500	3500	2800	7800
Less: May costs	800	0	0	800
Cost of raw materials used in June	700	3500	2800	7000

Kindly complete as necessary since the required format/template has not been provided with the question.

2.

	Job 602	Job 603	Job 604	Total
May costs	150	0	0	150
June costs	750	1600	1900	4250
Total	900	1600	1900	4400

3. Predetermined overhead rate used in June = $800/$1600 = 50% of direct labor cost

4.

Job	Raw Materials	Direct Labor	Overhead Applied	Total Cost	Cost transferred to finished goods	Costs of Ending WIP
602	1500	900	450	2850	2850	0
603	3500	1600	800	5900	5900	0
604	2800	1900	950	5650	0	5650
Total	7800	4400	2200	14400	8750	5650