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	$	1,050		$	540		$	0		$	0
Charged to the jobs during October:
Direct materials	$	2,840		$	4,000		$	1,420		$	3,770
Direct labor	$	1,240		$	840		$	530		$	360
Manufacturing overhead applied	$	4,462		$	1,830		$	2,560		$	480
Units completed		218			0			110			0
Units in process at the end of October		0			308			0			261
Units sold during October		158			0			51			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 $1,390. 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

Solution:

Part 1 – Using the direct method, Cost of Goods Sold for October is $9,043

Direct method means the calculation of cost before charging over or under applied overhead to Cost of Goods Sold.

Working

	Job A256	Job A257	Job A258	Job A260	TOTAL
Beginning balance	$1,050	$540	$0	$0
Charged to the jobs during October:
Direct materials	$2,840	$4,000	$1,420	$3,770
Direct labor	$1,240	$840	$530	$360
Manufacturing overhead applied	$4,462	$1,830	$2,560	$480
Total Manufacturing Cost (A)	9,592	7,210	4,510	4,610
Status	Completed	Not Completed	Completed	Not Completed
Total Units Completed (B)	218 Units		110 Units
Cost per Completed Unit (A/B)	$44.00		$41.00
Units Sold during October	158 Units		51 Units
Total Cost of Goods Sold (Cost per Completed Unit x Units Sold)	$6,952.00		$2,091.00		$9,043.00

Part 2 --- Total Value of Finished Goods Inventory at the end of October

Value of Finished Goods Ending Inventory
Completed Jobs	Job A256	Job A258
Units completed	218	110
Units sold during October	158	51
Ending Finished Goods Inventory (Completed Units - Sold Units)	60	59
Cost per Completed Unit	$44	$41
Value of Finished Goods Inventory	$2,640 (60*$44)	$2,419 (59*41)

Total Value of Finished Goods Inventory = $2,640 + $2,419 = $5,059

Part 3 – Total Value of Work in Process Inventory

Jobs Not Completed	Job A257	Job A260	Total
Total Manufacturing Cost (Refer Part 1)	$7,210	$4,610	$11,820

Total Value of Work IN Process Inventory = $11,820

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