Question

In: Accounting

On September 1, two jobs were in process at Pete’s Patios. Details of the jobs follow:...

On September 1, two jobs were in process at Pete’s Patios. Details of the jobs follow:

  

Job Number Direct Materials Direct Labor
PP-24 $ 960 $ 372
PP-30 655 1,700


Materials Inventory on September 1 totaled $5,550, and $662 worth of materials was purchased during the month. Indirect materials of $102 were withdrawn from materials inventory. On September 1, finished goods inventory consisted of two jobs, PP-12, costing $2,358, and PP-14, with a cost of $932. Costs for both jobs were transferred to Cost of Services Billed during the month.

  

Also during September, Jobs PP-24 and PP-30 were completed. Completing Job PP-24 required an additional $1,360 in direct labor. The completion costs for Job PP-30 included $680 in direct materials and $4,300 in direct labor.

  

Pete’s Patios used a total of $1,962 of direct materials (excluding the $102 indirect materials) during the period, and total direct labor costs during the month amounted to $8,120. Overhead has been estimated at 50 percent of direct labor costs, and this relation has been the same for the past few years.

  

Required:

Compute the costs to Jobs PP-24 and PP-30 and the balances in the September 30 inventory accounts.

Solutions

Expert Solution

Cost to complete PP-24
Additional Direct Labor 1360
Overhead (Direct labor*50%) 680
Total 2040
Cost to complete PP-30
Additional Direct materials 680
Direct Labor 4300
Overhead (Direct labor*50%) 2150
Total 7130
Material Inventory as of Sept. 30th
Beginning Materials inventory 5550
Add: Purchases 662
Less: Indirect material used 102
Less: Direct material used 1962
       Material Inventory 8276
Balance of Work-in-Process as of Sept. 30th
Total Direct materials used during the month 1962
Total direct labor costs during the month 8120
Overhead applied (Labor cost*50%) 4060
Total costs incurred during the month 14142
Less: Cost to complete Job-24 and PP-30:
   Job PP-24 2040
   Job PP-30 7130
   Totals costs to complete 9170
Balance of Work-in-Process Inventory 4972
Balance of Finished Goods Inventory as of Sept. 30th
Direct Materials direct labor Overhead Total
Beginning Work in process balance of PP-24 960 372 186 1518
Beginning Work in process balance of PP-30 655 1700 850 3205
Cost to complete PP-24 2040
Cost to complete PP-30 7130
Balance of Finished Goods Inventory 13893

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