Question

Marigold, Inc. manufactures ergonomically designed computer furniture. Marigold uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: Job No. Item Units Accumulated Cost CC723 Computer caddy 22,000 $970,000 CH291 Chair 15,000 440,000 PS812 Printer stand 26,000 286,000 $1,696,000 On November 30, Marigold’s Raw Materials Inventory account totaled $685,000, and its Finished Goods Inventory totaled $3,486,400. Marigold applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totaled $4,850,000, and the company planned to use 970,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 880,000 machine hours, total manufacturing overhead amounted to $4,274,500, and Cost of Goods Sold was $8,790,250. For the pursposes of this problem, ignore year-end disposition of over / under applied overhead. Marigold purchased $638,000 in raw materials in December and incurred the following costs for jobs in process that month: Job No. Materials Issued Machine Hours Direct Labor Hours Direct Labor Cost CC723 $196,000 20,000 12,000 $127,400 CH291 $17,800 5,000 3,800 $45,200 PS812 $238,000 22,400 18,300 $224,500 DS444 $256,000 20,000 16,700 $141,000 The following jobs were completed in December and transferred to the Finished Goods Inventory: Job No. Item Units CC723 Computer caddy 22,000 CH291 Chair 15,000 DS444 Desk 7,000

(a) Calculate the total cost of each of the four jobs worked on in December. CC723 CH291 PS812 DS444 Total Cost $ $ $ $

(b) Calculate the total manufacturing cost for December. Total manufacturing cost $

(c) Calculate the cost of goods manufactured for December. Cost of goods manufactured $

(d) Calculate the balance in the Work in Process Inventory account on December 31. Balance in work in process $

(e) Assume that Marigold sold 15,000 computer caddies, 12,000 chairs, and 4,500 desks in December. Calculate Cost of Goods Sold for the month of December and the ending Finished Goods Inventory balance on December 31. (For computation purpose round per unit rates to 2 decimal places, e.g. 3.54. Round final answers to 0 decmial places, e.g. 45,000.)

Cost of goods sold $

Finished goods inventory $

Answer 1

Solution a:

Predetermined overhead rate = Estimated overhead / Estimated machine hours = $4,850,000 / 970000 = $5 per machine hour

Job Cost Sheet
Particulars	Job No CC723	Job No CH291	Job No PS 812	Job No DS444	Total
Beginning WIP	$970,000.00	$440,000.00	$286,000.00		$1,696,000.00
Direct material	$196,000.00	$17,800.00	$238,000.00	$256,000.00	$707,800.00
Direct labor	$127,400.00	$45,200.00	$224,500.00	$141,000.00	$538,100.00
Manufacturing overhead applied	$100,000.00	$25,000.00	$112,000.00	$100,000.00	$337,000.00
Total Job Cost	$1,393,400.00	$528,000.00	$860,500.00	$497,000.00	$3,278,900.00
Status	Completed	Completed	In Process	Completed

Solution b:

Refer above table, Total manufacturing cost for december = $3,278,900

Solution c:

Refer above table, cost of goods manufactured for December = $3,278,900 - $860,500 = $2,418,400

Solution d:

balance in the Work in Process Inventory account on December 31 = $860,500

Solution e:

Computation of Cost of goods sold for December
Particulars	Job No CC723	Job No CH291	Job No DS444	Total
Total cost	$1,393,400.00	$528,000.00	$497,000.00	$2,418,400.00
Nos of units	22000	15000	7000
Cost per unit	$63.34	$35.20	$71.00
Nos of units sold	15000	12000	4500
Cost of goods sold for december	$950,100	$422,400	$319,500	$1,692,000
Ending finished goods inventory related to job completed in december	$443,300	$105,600	$177,500	$726,400

Computation of ending finished goods inventory and Cost of goods sold
Particulars	Finished goods inventory	Cost of goods sold
Beginning inventroy	$3,486,400.00
Total cost of goods sold for 11 months		$8,790,250.00
Cost of goods sold for december		$1,692,000.00
Finished goods inventory related to job completed in december	$726,400.00
Total	$4,212,800.00	$10,482,250.00