Question

In: Accounting

THE Company applies overhead to jobs using a pre-determined overhead rate of 80% of direct labor...

THE Company applies overhead to jobs using a pre-determined
overhead rate of 80% 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 ......  $72,000     $56,000     $44,000
direct labor cost .....  $69,000     $52,600     $38,300

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.

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

Solutions

Expert Solution

Correct answer------------$148,327

Working

Job 1 Job 2 Total
Direct material $          72,000 $          56,000
Direct labor $          69,000 $          52,600
Overhead applied (Direct labor x 80%) $          55,200 $          42,080
Total Finished goods inventory $        196,200 $        150,680
Sold portion

$          98,100

(196200/2)

$        100,453

(150680/3 x 2)
Unsold finished goods inventory $          98,100 $          50,227 $        148,327

ekkarill92 answered 2 years ago
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