Question

On March 1 a dressmaker starts work on three custom-designed wedding dresses. The company uses job order costing and applies overhead to each job (dress) at the rate of 40% of direct materials costs. During the month, the jobs used direct materials as shown below. Job 1 Job 2 Job 3 Direct materials used $5,000 $7,000 $1,500 During the month, the jobs used direct labor as shown below. Jobs 1 and 3 are not finished by the end of March, and Job 2 is finished but not sold by the end of March. Job 1 Job 2 Job 3 Direct labor used $9,000 $4,000 $3,000 1. Determine the amounts of direct materials, direct labor, and factory overhead applied that would be reported on job cost sheets for each of the three jobs for March.

2. Determine the total dollar amount of Work in Process Inventory at the end of March.

     

3.	Determine the total dollar amount of Finished Goods Inventory at the end of March. Assume the company has no beginning Work in Process or Finished Goods inventories.

     

Answer 1

• All working forms part of the answer
• Working for total cost:

	Job 1	Job 2	Job 3
Beginning WIP	$                        -	$                         -	$                       -
Direct Material Added	$           5,000.00	$             7,000.00	$          1,500.00
Direct Labor	$           9,000.00	$             4,000.00	$          3,000.00
Applied manufacturing Overhead [40% of above direct labor cost]	$           3,600.00	$             1,600.00	$          1,200.00
Total Cost	$         17,600.00	$           12,600.00	$          5,700.00
Status	Work in Process	Finished Inventory not sold	Work in Process

• Answers

---Answer ‘2’: Total Dollar amount of WIP Inventory at the end of March = Total cost of Job 1 and 3 = $ 17,600 + $ 5,700 = $ 23,300

---Answer ‘3’: Total Dollar amount of Finished Goods Inventory = Cost of Job 2 = $ 12,600