Question

Techuxia Corporation worked on four jobs during October: Job A256, Job A257, Job A258, and Job A260. At the end of October, the job cost sheets for these jobs contained the following data:   

	Job A256			Job A257			Job A258			Job A260
Beginning balance	$	1,060		$	530		$	0		$	0
Charged to the jobs during October:
Direct materials	$	2,820		$	4,040		$	1,530		$	3,780
Direct labor	$	1,150		$	880		$	520		$	310
Manufacturing overhead applied	$	2,635		$	1,740		$	1,174		$	410
Units completed		219			0			104			0
Units in process at the end of October		0			309			0			251
Units sold during October		153			0			63			0

Jobs A256 and A258 were completed during October. The other two jobs had not yet been completed at the end of October. There was no finished goods inventory on October 1.

       

In October, overhead was overapplied by $1,330. The company adjusts its cost of goods sold every month for the amount of the underapplied or overapplied overhead.

Required:     

1. Using the direct method, what is the cost of goods sold for October?

2. What is the total value of the finished goods inventory at the end of October?

       

3. What is the total value of the work in process inventory at the end of October?

Answer 1

1)

The calculation of unadjusted cost of goods sold as follows:

	Job A256	job A258	total
Begining balance	$1060	$0
Direct material	$2820	$1530
Direct labour	$1150	$520
Manufacturing OH applied	$2635	$1174
Total(a)	$7665	$3224
Unit completed (b)	219	104
Unit product cost (a÷b)	35	31
Unit sold	153	63
Unadjusted COGS	$5355	$1953	$7308

Cost of goods sold must be adjusted for the overapplied overhead as follows

Unadjusted cost of goods sold (see above)	$7308
Deduct: Overapplied overhead	$1330
COGS	$5978

2)

	Job A256	job A258	total
Units completed	219	104
Deduct; unit sold	153	63
Units in ending inventory	66	41
Unit product cost	35	31
Total cost of ending finished goods inventory	$2310	$1271	$3581

3)

	Job A257	job A260	Total
Begining balance	$530	$0
Direct material	$4040	$3780
Direct labour	$880	$310
Manufacturing OH applied	$1740	$410
Total cost of ending work in process inventory	$7190	$4500	$11690

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