Question

cnaaren's furnishings. The company uses a job-order costing system, Kidco's work-in-process inventory at the end or November consisted of the following jobs Richmond started kodCo, inc in Albuquerque, New Mexico to produce affordable 20.000 15.000 250,000 The company's November 30 finished-goods inventory, which is valued using the FIFO (first-in ust outy method consisted of five items Accumulated Cost S 480,000 Duantity and Unit Cost 7 500 unts 364 aach 13000 unes $23 each 1 1,200 unts a s102 each 21,000 unts a 555 each 19.400 units & 335 each 99,000 1,142.400 1.155,000 kidco applies manufacturing overnead on the basis or direct-labor hours. The company's overhead budget for the year totals $4.500.000 The company plans to use 600.000 direct-iabor hours during this period, which is the firm's estimated practical capacity Through the first 11 rionths of the year, a totat of 555 000 direct-labor hours were worked, and total overheacd amountea to $4.273,500 November. Ine balance in kidco s Raw-Materiat Inventory account, which includes w matenai and purchased parts, was s668.000. Aoditions to inventory and requisitions rom mventery during Decermser inctuded the toliowing 104,000 10,800 82.000 81/000 124.000 62.000 65,000 xt 098 ,000 carnages? Dunng December KidCo's factory payrott consisted of the fotowing: $122,400 3,200 3.500 h 14,000 3.000 138.000 29,400 S7 600 $621,100 ndrect labor The following list shows the jobs that were completed and the unit sales for December Job No. CBS102 PLP088 STRO77 Quantity Completed 20,000 15,000 10000 5000 Items Quantity Shipped 17,500 21,000 14,000 18,000 Crbs Cribs. Sroters Strolers Dressers Carriages6,000 Required 1. Explain when t is appropriate for a company to use a job-order costing system 2. calculate the dollar balance in Kidco's Work-in-Process Inventory account as of December 31 3. Calculate the dollar amount related to the playpens in KidCo's Finished-Goods Inventory account as of December 31

Answer 1

Answer 1.
A Job order costing system is appropriate in any environment where costs can be readily identified with specific products, batches, contracts or projects.
Answer 2.
WIP - Dec-31 - DRS114
DRS114 Balance - Nov 30		250,000.00
December Additions:
Direct Material	124,000.00
Purchased Parts	87,000.00
Direct Labor	200,500.00
Manufacturing Overhead - 19,500 hrs X $7.50	146,250.00	557,750.00
WIP Inventory, Dec 31		807,750.00
Pre-determined Overhead Rate = $4,500,000 / 600,000 Hours = $7.50 per hour
Pre-determined Overhead Rate = $7.50 per hour
Answer 3.
Finished Goods Inventory - Playpens - Dec 31
	Units
Beginning Inventory - Nov 30	19,400.00
Units Completed in December	15,000.00
Units Available for Sale	34,400.00
Units Shipped in December	21,000.00
Finished Goods Inventory - Playpens - Dec 31	13,400.00
Since, KIDCo uses FIFO Method, all units in Finished Goods Inventory were completed in December.
Units Cost per Playpen:
WIP - Nov 30		420,000.00
December Additions:
Direct Material Used	3,000.00
Purchased Parts	10,800.00
Direct Labor	43,200.00
Manuafacturing Overhead - 4,400 Hrs X $7.50	33,000.00	90,000.00
Total Costs		510,000.00
Units Completed		15,000.00
Cost per Unit - $510,000 / 15,000 Units		34.00
Value of Finished Goods = $34 X 13,400 Units
Value of Finished Goods = $455,600