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	$	21,000		$	55,000		$	59,000
Direct labor		12,000			29,700			44,000
Overhead applied		4,560			11,286			16,720

Job 102 was started in production in May, and the following costs were assigned to it in May: direct materials, $8,000; direct labor, $3,300; and overhead, $1,254. 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?

	Direct Materials Job May June Total 102 $8,000 $8,000 103 0 104 0 Total $8,000 $8,000 Direct Labor Job May June Total 102 $3,300 $3,300 103 0 104 0 Total $3,300 $3,300

Overhead Rate Choose Numerator: / Choose Denominator: = Overhead Rate Job 102 / = Overhead rate / = 0 Job 103 / = Overhead rate / = 0 Job 104 / = Overhead rate / = 0

	Job Direct Materials Direct Labor Applied Overhead Total Cost Cost Transferred to Finished Goods 102 $21,000 $12,000 103 55,000 29,700 104 59,000 44,000 Total $135,000 $85,700

Answer 1

Req 1&2
		Direct materials
	Job	May	June	total
	102	8,000	13,000	21,000
	103		55,000	55000
	104		59,000	59000
	total	8,000	127,000	135,000
		Direct labor
	Job	May	June	total
	102	3,300	8,700	12,000
	103		29,700	29,700
	104		44,000	44,000
	total	3,300	82,400	85,700
Req 3
	Choose Numerator		/	Choose Denominator		=	OH rate
	Job 102
	overhead cost		/	Direct labor costs		=	overhead rate
	4,560		/	12,000		=	38%
	Job 103
	overhead cost		/	Direct labor costs		=	overhead rate
	11,286		/	29,700		=	38%
	Job 104
	overhead cost		/	Direct labor costs		=	overhead rate
	16,720		/	44,000		=	38%
Req 4		Direct	Direct	applied	total	cost trfd
	Job	materials	labor	overhead	cost	to finished
	102	21,000	12,000	4,560	37,560	37,560
	103	55,000	29,700	11,286	95,986	95,986
	104	59,000	44,000	16,720	119,720	0
	total	135,000	85,700	32,566	253,266	133,546