Question

Bonita Fabricators produces protective covers for smart phones. Since the covers must be customized to each smart phone model, Bonita uses a job order costing system. On September 1, the company reported the following inventory balances: Direct Materials $31,100 Work in Process $148,000 Finished Goods $260,000

During September, the following events occurred: 1. Bonita purchased direct materials costing $428,000 on account. 2. Bonita used $436,000 in direct materials in production. 3. Bonita’s employees clocked 21,000 direct labor hours at an average wage rate of $13.86 per direct labor hour. 4. The company incurred $185,000 in manufacturing overhead, including $25,000 in indirect labor costs. 5. Using direct labor hours as the application base, the company applied $166,000 of manufacturing overhead to jobs worked on in September. 6. The company completed production on jobs costing $853,000. 7. The company delivered jobs costing $1,075,000 to customers.

1) Calculate the ending September balance of the Direct Materials, Work in Process, and Finished Goods Inventory accounts.

2) Calculate total manufacturing costs for September.

Answer 1

1.

Direct Materials at the end of September = Beginning Inventory + Purchase - Material used

Direct Materials at the end of September = 31,100 + 428,000 - 436,000

Direct Materials at the end of September = 23,100

Work in Progress= Opening + Labour + Overheads

=148,000 + [(21,000×13.86)-(166,000/185,000×21,000×13.86)]+[185,000-166,000]

=148000 + 291060 - 261167 + 19000

= 196893

Finished Goods = Opeening + Production - Delivered to customers

= 260,000 + 853,000- 1,075,000

= 38,000

2.

Manufacturing Cost for September = Material + Labour + Overheads

=436,000 + 166,000+ (166000/185000 × 21,000 × 13.86)

=436,000+ 166,000+ 261,167

= 863,167