Question

Part 1: Information to use in completing is below and the requirements follow where you will answer the questions.

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

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

The company estimated the following manufacturing overhead costs for the year:

$600,000

The company estimated the following usage of direct-labor hours for the year:

200,000

2. Beginning Work-in-process, March 1 (Job 57)

$108,000

3. Beginning Finished Goods, March 1 (Job 55)

$125,000

2. Labor Information for March:

Direct-labor hours:

Job 57

7,000

Job 58

6,000

Job 59

4,000

Labor costs:

Direct-labor wages

$408,000

Indirect-labor wages

$30,000

Supervisory salaries

$12,000

3. Material Information for March:

Raw Materials, Inventory, March 1

$21,000

Purchase or raw material

$210,000

Direct materials requisitioned:

Job 57

$90,000

Job 58

$75,000

Job 59

$51,000

4. Other costs incurred in March:

Factory Utilities

$12,000

Sales offices Utilities

$3,200

Administrative offices Utilities

$2,000

Factory equipment repair and maintenance costs

$11,200

Depreciation on factory equipment

$5,000

Manufacturing supplies purchased and used

$24,000

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

Job 57

$400,000

Job 58

$250,000

Required:

You need to use cell references to provide answers and calculations.

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

Total

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

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

6. Prepare a statement of cost of goods manufactured for March below. Use Manufacturing Overhead applied in your statement.

Glass Company

Statement of Cost of Goods Manufactured

For Month ending March 31, 2018

Answer 1

1) Calculation of predetermined overhead rate

Manufacturing and production Overheads are loaded to products/jobs based on the certain predetermined rate.

Basis for overherad allocation cab be machine hours and labour depending upon the nature of industry and company policy

Here, Estimated manufacturing overhead is $ 600,000

No. of Direct labour hours are 200,000

Direct Labour hours are used as a basis for allocating overhead to jobs

Pre-determined rate = Estimated manufacturing overhead

                                  Estimated No. of Direct Labour Hours

Pre-determined rate = $600,000

                                    200,000

Pre-determined rate = $3

2) Job Cost Sheet

Before doing job costing, we should arrive at labour rate to be applied for the calculation of job wise labour cost

Labour Rate = Direct Labour Wages

                     No. of Direct Labour Hours

Labour Rate = $408,000

                    (7000+6000+4000)

Labour Rate = $408,000

                         17,000

Labour Rate = $24

Job Cost Sheet

Particulars	Job 57	Job 58	Job 59	Total
Opening Balance	$108,000	-	-	$108,000
Current Cost
Direct Material	$90,000	$75,000	$51,000	$216,000
Direct Labour (Labour Rate * No.of Direct Labour Hours)	$168,000	$144,000	$96,000	$408,000
Applied Overheads (Overhead Rate * No of Direct Labour Hours)	$21,000	$18,000	$12,000	$51,000
Total	$387,000	$237,000	$159,000

3) Calculation of Job wise Opening and Closing Work in progress

Particulars	Job 57	Job 58	Job 59	Total
Opening Work in Progress	$108,000	-	-	$108,000
Direct Material	$90,000	$75,000	$51,000	$216,000
Direct Labour	$168,000	$144,000	$96,000	$408,000
Applied Overheads	$21,000	$18,000	$12,000	$51,000
Cost of Goods Manufactured	$387,000	$237,000	$159,000
Closing Work in Progress	-	-	$159,000	$159,000

Closing work in Progress for Job 57 and 58 is NIL as these jobs have been processed and sold during March

4) Calculation of Job wise Opening and Closing Finished Goods

Particulars	Job 55	Job 57	Job 58	Total
Opening Finished Goods	$125,000	-	-	$125,000
Processed Job Cost of Production	-	$387,000	$237,000	$624,000
Jobs Sold	-	($387,000)	($237,000)	($624,000)
Closing Finished Goods	$125,000	-	-	$125,000

5) Computation of Cost of Goods Sold

Total of Other Cost incurred in March for carrying out production

Cost	Amount (In $)
Factory Utilities	12,000
Sales offices Utilities	3,200
Administrative offices Utilities	2,000
Factory equipment repair and maintenance costs	11,200
Depreciation on factory equipment	5,000
Manufacturing supplies purchased and used	24,000
Total Other Cost	57,400
Indirect Labour Cost	30,000
Supervisor Salaries	12,000
Total Other Indirect Labour Cost	42,000

Cost of Goods Sold - Job Wise

Particulars	Job 55	Job 57	Job 58	Job 59	Total
Opening Finished Goods	$125,000	-	-	-	$125,000
Cost of Goods Manufactured	-	$387,000	$237,000	$159,000	$783,000
Closing Finished Goods	($125,000)	-	-	-	($125,000)
Cost of Goods Sold	-	$387,000	$237,000	$159,000	$783,000

Cost of Goods Sold at Company Level

Cost	Amount in $
Opening Stock of RM	21,000
Purchase of Raw Material	210,000
Job wise Cost of Goods Sold	783,000
Other Cost Incl. Manufacturing Overhead and Other	99,400
Total Cost of Goods Sold	111,3400