Question

Hi! I have a homework question I'm not sure if I'm doing it correctly. Below is the information from the question and my answer in bold.

Glass Company makes glass orders based on the customer specifications, so the company uses job costing to track costs.

The company uses direct labor hours as the cost driver for manufacturing overhead application.

Manufacturing overhead costs for the year:        $787,500

Usage of direct labor hours for the year:               225,000

Beginning Work-in-process, March 1 (Job 57)      $80,000

Beginning Finished Goods, March (Job 55)           $150,000

Labor Information for March:

              Direct labor hours:          

              Job 57                                                              7,000

              Job 58                                                              8,000

              Job 59                                                              5,000

              Labor costs:

              Direct labor wages                                       $420,000

              Indirect labor wages                                    $25,000

              Supervisory salaries                                     $30,000

Material Information for March:

              Raw Materials, Inventory, March 1          $20,000

              Purchase or raw material                            $220,000

Direct material requisitioned:

              Job 57                                                              $80,000

              Job 58                                                              $75,000

              Job 59                                                              $51,000

Other costs incurred in March:

              Factory Utilities                                             $7,000

              Sales office Utilities                                      $4,000

              Administrative offices Utilities                  $3,000

              Factory equip repair & maint costs          $6,000

              Depreciation on factory equipment         $2,000

              Manufacturing supplies purch & used     $5,000

During March the following jobs were completed and sold for the following sales price:

              Job 57                                                              $200,000

              Job 58                                                              $250,000

Hint: You need to calculate the hourly rate and then compute direct labor cost per job.

1. Develop the predetermined overhead rate.

2. Complete the job cost sheets provided below for the month of March:

                                            Job 57                 Job 58                 Job 59

Beginning Balance                     

Current Costs:

Direct materials              

Direct labor                      

Applied overhead          

Totals                             

3. Determine the ending Work-In-Process Inventory at the end of March and provide the Job number of the job(s) still in Work-in-Process at the end of March and the determined total cost of ending work in process for March.

4. Determine the ending Finished Goods for March and provide the Job number(s) of the job(s) in Finished Goods at the end of March and determine the total cost of ending finished goods for March.

5. Determine the Cost of Goods Sold for March and provide the Job number of the Job(s) in Cost of Goods Sold for March and determine the total cost of goods sold for March.

Answer 1

Labor rate = $420000 / 20000 = $21 per labor hour
Overhead rate = $787500 / 225000 = $3.50 per labor hour

	Job 57	Job 58	Job 59
Beginning Balance	$            80,000
Current Costs:
Direct materials	$            80,000	$             75,000	$        51,000
Direct labor	$         1,47,000	$         1,68,000	$     1,05,000
Applied overhead	$            24,500	$             28,000	$        17,500
Totals	$        3,31,500	$         2,71,000	$     1,73,500

3.
Ending WIP is for Job 59 = $173500

4.

Ending Finished Goods is for Job 55 = $150000 i.e. Opening balance, since only Job 57 & 58 are sold

5.
Cost of Goods Sold = $602500
Job 57 = $331500
Job 58 = $271000