Question

Prepare Job-Order Cost Sheets, Predetermined Overhead Rate, Ending Balance of WIP, Finished Goods, and COGS

At the beginning of March, Mendez Company had two jobs in process, Job 86 and Job 87, with the following accumulated cost information:

	Job 86	Job 87
Direct materials	$4,800	$1,600
Direct labor	1,200	3,000
Applied overhead	888	2,220
Balance, March 1	$6,888	$6,820

During March, two more jobs (88 and 89) were started. The following direct materials and direct labor costs were added to the four jobs during the month of March:

	Job 86	Job 87	Job 88	Job 89
Direct materials	$3,000	$7,000	$2,100	$1,500
Direct labor	800	6,000	900	500

At the end of March, Jobs 86, 87, and 89 were completed. Only Job 87 was sold. On March 1, the balance in Finished Goods was zero.

Required:

1. Calculate the overhead rate based on direct labor cost.

$ %

2. Prepare a brief job-order cost sheet for the four jobs. Show the balance as of March 1 as well as direct materials and direct labor added in March. Apply overhead to the four jobs for the month of March, and show the ending balances.

Mendez Company
Job-Order Cost Sheets
For the Month of March
	Job 86	Job 87	Job 88	Job 89
Beginning balance, March 1	$	$	$	$
Direct materials
Direct labor
Applied overhead
Total, March 31	$	$	$	$

3. Calculate the ending balances of Work in Process and Finished Goods as of March 31.

Work in Process: $
Finished Goods: $

4. Calculate the Cost of Goods Sold for March.

$

Answer 1

1. Calculate the overhead rate based on direct labor cost.

Overhead rate = Overhead applied*100/direct labour cost

                     = 888*100/1200

Overhead rate = 74% of direct labour cost

2. Prepare a brief job-order cost sheet for the four jobs.

	Job 86	Job 87	Job 88	Job 89
Beginning balance, March 1	6888	6820
Direct materials	3000	7000	2100	1500
Direct labour	800	6000	900	500
Applied overhead	592	4440	666	370
Total March 31	11280	24260	3666	2370

3. Calculate the ending balances of Work in Process and Finished Goods as of March 31.

Work in process = Job 88 = 3666

Finished goods = 11280+2370 = 13650

4. Calculate the Cost of Goods Sold for March.

Cost of goods sold = $24,260