Question

on august 1st, Carole

or Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost, Unit Cost On August 1, Cairle Company's work-in-process inventory consisted of three jobs with the following costs: Job 70 Job 72 Direct materials Job 71 $2,000 1,300 $1,600 1,900 $850 Direct labor 900 Applied overhead 1,425 975 675 During August, four more jobs were started. Information on costs added to the seven jobs during the month is as follows: Job 70 Job 71 Job 72 Job 73 Job 74 Job 75 Job 76 Direct materials $800 $1,235 $3,550 $5,000 $300 $560 $80 Direct labor 1,000 1,400 2,200 1,800 600 8 60 1 72 Before the end of August, Jobs 70, 72, 73, and 75 were completed. On August 31, Jobs 72 and 75 were sold. Required: 1. Calculate the predetermined overhead rate based on direct labor cost. % of direct labor cost. 2. Calculate the ending balance for each job as of August 31. Ending Balance Job 70 Check My Work 3 more Check My Work uses remaining

Answer 1

Answer 1:

75 % of direct labor cost

Working:

From August 1, Work in process data, we find:

For Job 70 Applied overhead = 1425 / 1900 = 75% of direct labor cost.

Answer 2:

Job 70 Job 71 Job 72 Job 73 Job 74 Job 75 Job 76 Ending Balance $7,475 $7,960 $9,825 $8,150 $1,350 $2,065 $381

Working:

Job 70 Job 71 Job 72 Job 73 Job 74 Job 75 Job 76 $1,600 $1,900 $1,425 $4,925 $2,000 $1,300 $975 $4,275 $850 $900 $675 $2,425 Work in process August 1 Direct material Direct labor Applied overhead Total Work in process August 1 (A) Costs added during August Direct material Direct labor (DL) Applied overhead (75% * DL) Total cost added in August (8) Ending balance Aug 31 (A+B) $800 $1,000 $750 $2,550 $7,475 $1,235 $1,400 $1,050 $3,685 $7,960 $3,550 $2,200 $1,650 $7,400 $9,825 $5,000 $1,800 $1,350 $8,150 $8,150 $300 $600 $450 $1,350 $1,350 $560 $860 $645 $2,065 $2,065 $80 $172 $129 $381 $381

Answer 3:

Work in process as of August 31 $ 9,691

Working:

Jobs 71, 74 and 76 are in work in process.

Work in process = 7960 + 1350 + 381 = $9,691

Answer 4:

Cost of Goods sold for August 31 $ 11,890

Working:

Jobs 72 and 75 were sold

Cost of goods sold = 9825 + 2065 = $11,890

Answer 5:

Sales revenue for August 31 $ 14,268

Working:

Jobs 72 and 75 were sold

Sales revenue = 9825 * (1 + 20%) + 2065 * (1 + 20%) = $14,268