Question

Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year. ? Activity Cost Driver Amount of driver setups $240,000 number of setups 6,000 purchasing 160,000 number of parts 20,000 other overhead 300,000 direct labor hours 80,000 ? The following information about the jobs was given for April. ? ? Job 101 Job 102 Job 103 Job 104 Balance 4/1 $64,900 $40,770 $30,500 0 direct materials 54,000 37,900 25,000 11,000 direct labor 80,000 38,500 43,000 21,000 number of setups 40 10 30 200 number of parts 300 80 400 500 direct labor hours 5,000 2,400 5,200 1,200 ? By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process. What is the cost of goods manufactured? a. $ 249,610 b. $ 144,400 c. $ 215,670 d. $ 178,340

Answer 1

Option (a) is correct i.e., cost of goods manufactured is $249,610.

Compute the cost of goods manufactured as follows:

Step 1:

Calculate Activity driver rate as follows:

Step 2:

Calculate overhead allocated to each job as follows:

Working note:

Calculate the values in the above table as follows:

Step 3:

Calculate total cost of completed jobs as follows:

Step 4:

Note:

Job 101 and job 104 are not included in calculating cost of goods manufactured reason being they were not completed by April 30.