Question

In: Accounting

THE Company applies overhead to jobs using a pre-determined overhead rate of 60% of direct labor...

THE Company applies overhead to jobs using a pre-determined
overhead rate of 60% of direct labor cost. During 2021, THE
Company began work on three jobs. Information relating to
these three jobs appears below:

                         Job #1      Job #2      Job #3
direct materials ......  $74,300     $75,000     $69,000
direct labor cost .....  $82,000     $60,700     $46,000

By the end of 2021, job #1 and job #2 had been completed.
Job #3 was not completed by the end of 2021. Additionally,
by the end of 2021, one-half of job #2 had been sold and
one-third of Job #1 was sold. THE Company incurred total
actual overhead cost of $122,740 during 2021.

Part A.) Calculate the amount of work in process inventory reported
in THE Company's December 31, 2021 balance sheet.

Part B.) Calculate the amount of finished goods inventory reported in THE Company's December 31, 2021 balance sheet.

Part C.) Calculate the cost of goods sold reported by THE Company for 2021 after the overhead variance has been closed.

Solutions

Expert Solution

Job 01 Job 02 Job 03 Total
Direct material 74300 75000 69000 218300
Direct Labour 82000 60700 46000 188700
Overheads applied @ 60% of DLC 49200 36420 27600 113220
Total cost 205500 172120 142600 520220
Status Finished Finished In process
Under/Over-applied Overheads
Overheads incurred 122740
Overheads applied 113220
Under-applied overheads 9520
Amount of WIP inventory: 142600
Amount of Finished goods inventory:
Job 01 (205500*2/3) 137000
Job 02 (172120*1/2) 86060
Amount of Finished goods inventory: 223060
Amount of Cost of goods sold (Adjusted)
Cost of Job 01 sold (205500*1/3) 68500
Cost of Job 02 sold(172120*1/2) 86060
Unadjusted COGS 154560
Add: Under-applied Overheads 9520
Adjusted COGS 164080

ekkarill92 answered 2 years ago
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