Question

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs. Job 102 Job 103 Job 104 Direct materials $ 43,000 $ 73,000 $ 53,000 Direct labor 11,000 28,600 43,000 Overhead applied 4,400 11,440 17,200 Job 102 was started in production in May and the following costs were assigned to it in May: direct materials, $13,000; direct labor, $4,000; and overhead, $1,600. Jobs 103 and 104 were started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 were finished in June, and Job 104 is expected to be finished in July. No raw materials were used indirectly in June. Using this information, answer the following questions. (Assume this company’s predetermined overhead rate did not change across these months.) 1&2. Complete the table below to calculate the cost of the raw materials requisitioned and direct labor cost incurred during June for each of the three jobs? 3. Using the accumulated costs of the jobs, what predetermined overhead rate is used? 4. How much total cost is transferred to finished goods during June?

part 2

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.
  

	April 30				May 31
Inventories
Raw materials	$	44,000			$	54,000
Work in process		10,400				21,700
Finished goods		64,000				37,600
Activities and information for May
Raw materials purchases (paid with cash)						212,000
Factory payroll (paid with cash)						349,000
Factory overhead
Indirect materials						17,000
Indirect labor						82,000
Other overhead costs						122,000
Sales (received in cash)						1,420,000
Predetermined overhead rate based on direct labor cost						70	%

Determine whether there is over or underapplied overhead.

part 3

The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs.

	Job 602					Job 603					Job 604
Direct materials		$	1,700				$	3,600				$	3,000
Direct labor			900					1,480					2,300
Overhead			450					740					1,150

Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $500; direct labor, $150; and overhead, $75. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company’s predetermined overhead rate did not change over these months.)

Required:
1. What is the cost of the raw materials used in June for each of the three jobs and in total?
2. How much total direct labor cost is incurred in June?
3. What predetermined overhead rate is used in June?
4. How much cost is transferred to finished goods inventory in June?

part 4

The following information applies to the questions displayed below.]

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.

	April 30				May 31
Inventories
Raw materials	$	50,000			$	38,000
Work in process		9,200				18,500
Finished goods		59,000				34,300
Activities and information for May
Raw materials purchases (paid with cash)						171,000
Factory payroll (paid with cash)						100,000
Factory overhead
Indirect materials						17,000
Indirect labor						23,000
Other overhead costs						106,000
Sales (received in cash)						1,800,000
Predetermined overhead rate based on direct labor cost						55	%

Incurred other overhead costs (record credit to Other Accounts).

Application of overhead to work in process.

Prepare journal entries for the above transactions for the month of May.

part 5

The following information applies to the questions displayed below.]

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.

	April 30				May 31
Inventories
Raw materials	$	50,000			$	38,000
Work in process		9,200				18,500
Finished goods		59,000				34,300
Activities and information for May
Raw materials purchases (paid with cash)						171,000
Factory payroll (paid with cash)						100,000
Factory overhead
Indirect materials						17,000
Indirect labor						23,000
Other overhead costs						106,000
Sales (received in cash)						1,800,000
Predetermined overhead rate based on direct labor cost						55	%

Direct labor usage.

Indirect labor usage.

Total payroll paid in cash.

Prepare journal entries for the above transactions for the month of May.

Answer 1