Question

2. Pribil Farm Equipment is a job-order costing manufacturer that uses a plantwide overhead rate based on direct labor hours. Estimations for the year include $250,000 in Overhead and 50,000 direct labor hours.  Pribil worked on five jobs in March. Data are as follows:

	Job 89	Job 90	Job 91	Job 92	Job 93
Balance, 3/1	$23,110	$18,240	$ 9,510	$0	$0
Direct Materials	13,000	17,210	22,900	15,240	8,210
Direct Labor cost	8,075	11,500	16,250	9,750	4,860
Direct Labor Hours	1,615	2,300	3,250	1,950	972

By March 31, Jobs 89 and 91 were completed and sold at Cost plus 55%. The rest of the jobs remained in process.

      Calculate the plantwide overhead rate.

1. Create Job Cost Reports for the month.

2. Calculate the Work-in-Process on March 31 and COGS.

3. Income Statement for the Month of March

Answer 1

Answer

Predetermined Overhead rate=

Estimated Overhead/Estimated Direct Labor Hours

420000/30000

14.00 per hour

A)	Job Costing Report
		Job 89	Job 90	Job 91	Job 92	Job 93
	Opening balance	$            23,110	$            18,240	$              9,510	$                    -	$                  -
	Direct Materials	$            13,000	$            17,210	$            22,900	$            15,240	$            8,210
	Direct Labor	$              8,075	$            11,500	$            16,250	$              9,750	$            4,860
	Overhead	22610(1615*14)	32200(2300*14)	45500(3250*14)	27300(1950*14)	13608(972*14)
	Total Costs	$            66,795	$            79,150	$            94,160	$            52,290	$          26,678

B)		Job 89	Job 90	Job 91	Job 92	Job 93
	Total Costs	$   66,795	$79,150	$94,160	$52,290	$26,678
	Completed and sold	$   66,795	$        -	$94,160	$        -	$        -
	Closing balance WIP	$           -	$79,150	$        -	$52,290	$26,678
	COGS (66795+94160)	$1,60,955
	Add: 55% markup	$   88,525
	Sales	$2,49,480
	Since all other jobs are in progress value of finished goods is 0

C)	Income Statement
	Sales	$     2,49,480
	Less: COGS	$     1,60,955
	Net Income	$        88,525
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