Question

Sheffield, Inc. manufactures ergonomically designed computer furniture. Sheffield uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs ob No CC723 Computer caddy 25,000 CH291 Chair PS812 Printer stand Units Accumulated Cost $960,000 433,000 300,000 $1,693,000 18,000 26,000 On November 30, Sheffield's Raw Materials Inventory account totaled $697,000, and its Finished Goods Inventory totaled $3,476,400. Sheffield applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totaled $5,000,000, and the company planned to use 1,000,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 850,000 machine hours, total manufacturing overhead amounted to $4,284,500, and Cost of Goods Sold was $8,760,250. For the pursposes of this problem, ignore year-end disposition of over/under applied overhead Sheffield purchased $648,000 in raw materials in December and incurred the following costs for jobs in process that month: Materials Machine Direct Labor Direct Labor ob No. Issued CC723 CH291 PS812 $247,000 22,000 DS444 $260,000 17,000 Hours Hours Cost 13,200 4,000 14,300 16,900 $192,000 $18,500 13,000 4,600 $122,400 $47,200 $225,500 $138,000 The following jobs were completed in December and transferred to the Finished Goods Inventory: ob No. Item Units CC723 Computer caddy 25,000 CH291 Chair 18,000 DS444 Desk 9,000

Answer 1

a.	Total cost of each job:
					CC723	CH291	PS812	DS444
	Accumulated cost				960000	433000	300000	1693000
	Material cost				192000	18500	247000	260000
	Direct labor cost				122400	47200	225500	138000
	Overhead assinged			(Note:1)	65000	23000	110000	85000
	Total cost				1339400	521700	882500	2176000
	Note:1
	Predetermined overhead rate=Estimated manufacturing overhead/Estimated machune hours=5000000/1000000=$5 per machine hour
	Overhead assigned=Machine hours worked*Predetermined overhead rate
					CC723	CH291	PS812	DS444
	Machine hours				13000	4600	22000	17000
	Predetermined overhead rate				5	5	5	5
	Overhead assigned				65000	23000	110000	85000
b.	Total manufacturing cost=Material cost+direct labor cost+Overhead assigned
					CC723	CH291	PS812	DS444	Total
	Material cost				192000	18500	247000	260000	717500
	Direct labor cost				122400	47200	225500	138000	533100
	Overhead assinged				65000	23000	110000	85000	283000
	Total manufacturing cost								1533600
c.	Cost of goods manufactured:
					$
	Total manufacturing cost				1533600
	Add: Beginning work in process inventory
	(Accumulated cost at the beginning)				1693000
					3226600
	Less: Ending work in process inventory
	(Refer d)				882500
	Cost of goods manufactured				2344100
d.	Balance in work in process inventory on Dec 31.
	Balance in work in process consist of Jobs not completed.
	Only uncompleted job is PS812
	Hence,balance in work in process inventory on Dec 31=Cost of job PS812=$ 882500
e.					CC723	CH291	DS444	Total
	Total cost			1	1339400	521700	2176000
	Units completed			2	25000	18000	9000
	Cost per unit			3=1/2	53.58	28.98	241.78
	Units sold			4	15000	12000	4500
	Cost of goods sold			5=3*4	803640	347800	1088000	2239440
					CC723	CH291	DS444	Total
	Units completed			1	25000	18000	9000
	Units sold			2	15000	12000	4500
	Units in hand			3=1-2	10000	6000	4500
	Cost per unit			4	53.58	28.98	241.78
	Cost of finished goods inventory			5=3*4	535760	173900	1088000	1797660