Question

Fun Corp makes playgrounds for schools and day care centers. At the end of May, the total ending balance of work in process inventory account was $14,670 comprising of three unfinished jobs, Job# 56 with $4,200 in materials and 15 hours worked; job # 58 with $6,470 in materials and 18 hours worked; and last it had job #61 with $1,540 in materials and 8 hours worked. The total of cost of goods sold for the month was $15,330. The company had no inventory left in the finished goods account. Fun pays its workers $20 an hour and overhead is 200% of total labor cost paid. Manufacturing overhead for May was overallocated by $1,200. What is the adjusted ending balance for Job #58 if the overallocated amount is disposed of by prorating using ending balances?

Answer 1

Adjusted ending balance for Job #58

7248

	Job# 56	Job# 58	Job# 61	Total
Materials	4200	6470	1540	12210
Direct labor cost ( Hours worked X $20)	300	360	160	820
Overhead applied (200%)	600	720	320	1640
Total cost	5100	7550	2020	14670
Total cost of goods sold plus ending inventory	30000	=15330+14670
Overallocated overhead prorated to Job #58	302	=1200*7550/30000
Total cost of Job #58	7550
Less: Overallocated overhead prorated to Job #58	302
Adjusted ending balance for Job #58	7248