Question

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the following information reflects Wallace Company’s job order production activities for May.

Raw materials purchase Factory payroll cost Overhead costs incurred

Indirect materials Indirect labour
Other factory overhead

$16, 000 15, 400

5, 000 3, 500 9, 500

Wallace’s predetermined overhead rate is 150% of direct labour cost. Costs allocated to the three jobs worked during May as follows:

Direct labour

Direct materials

Direct labour

Applied overhead

Job 401

1, 700

Job 402

Job 403

In-process balances on April 30

Direct materials

$3, 600

Applied overhead

2, 250

Costs during May

3, 550

5, 100

?

$3, 500

$ 1, 400

6,000

?

800

?

1. Determine the total cost of:

a. The April 30 inventory of jobs in process.
b. Materials used during May.
c. Labour used during May.
d. Factory overhead incurred and applied during May and the amount of any over-or-

underapplied overhead on May 31.
e. Each job as of May 31, the May 31 inventories of both goods in process and finished

goods, and the goods sold during May.

Answer 1

Part A

April 30 inventory of jobs in process (Job 401):

Direct materials	3600
Direct labor	1700
Applied overhead	2550
Total cost	$7850

Part B

Materials used during May:

Direct materials
Job 401	3550
Job 402	3500
Job 403	1400
Total direct materials	8450
Indirect materials	5000
Total materials used	$13450

Part C

Labor used during May:

Direct labor
Job 401	5100
Job 402	6000
Job 403	800
Total direct labor	11900
Indirect labor	3500
Total labor used	$15400

Part D

Factory overhead incurred in May:

Actual overhead
Indirect materials	5000
Indirect labor	3500
Other factory overhead	9500
Total actual overhead	18000
Overhead applied (150% *11,900)	17850
Underapplied overhead	$150

Part E:

	Job 401	Job 402	Job 403
In-process costs from April
Direct materials	3600
Direct labor	1700
Applied overhead	2550
Cost incurred in May
Direct materials	3550	3500	1400
Direct labor	5100	6000	800
Applied overhead	7650 (5100*150%)	9000 (6000*150%)	1200 (800*150%)
Total costs	$24150	$18500	$3400

Total cost of the May 31 inventory of goods in process (Job 403) = $3400

Total cost of the May 31 inventory of finished goods (Job 402) = $18,500

Total cost of goods sold during May (Job 401) = $24,150