Question

XLS 4-28 Job order costing (CMA adapted) (LO 5) ErgoFurn, Inc. manufactures ergonomically designed computer furniture. ErgoFurn 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 20,000 $ 900,000 CH291 Chair 15,000 431,000 PS812 Printer stand 25,000 250,000 $1,581,000 On November 30, ErgoFurn's Raw Materials Inventory account totaled $668,000, and its Finished Goods Inventory totaled $3,456,400. ErgoFurn applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totaled $4,500,000, and the company planned to use 900,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 830,000 machine hours, total manufacturing overhead amounted to $4,274,500, and Cost of Goods Sold was $8,750,250. ErgoFurn purchased $638,000 in raw materials in December and incurred the following costs for jobs in process that month: Job No. CC723 CH291 PS812 DS444 Materials Issued $155,000 $ 13,800 $211,000 $252,000 Machine Hours 12,000 4,400 19,500 14,000 Direct Labor Hours 11,600 3,600 14,300 12,500 Direct Labor Cost $122,400 $ 43,200 $200,500 $138,000

Answer 1

Predetermined overhead rate = $4500000 / 900000 = $5 per machine hour

a.

	CC723	CH291	PS812	DS444	Total
Beginning Cost	$            900,000	$       431,000	$         250,000		$        1,581,000
Direct Materials	$            155,000	$          13,800	$         211,000	$     252,000	$            631,800
Direct Labor	$            122,400	$          43,200	$         200,500	$     138,000	$            504,100
Overhead	$              60,000	$          22,000	$           97,500	$        70,000	$            249,500
Total Cost	$        1,237,400	$       510,000	$         759,000	$     460,000	$        2,966,400

b.

Direct Materials used	$            631,800
Direct Labor	$            504,100
Overhead	$            249,500
Total Manufacturing Costs	$        1,385,400

c.
Cost of Goods manufactured = $1237400+510000+460000 = $2207400

d.
Balance of Work in Process Inventory = $759000

e.

	CC723	CH291	DS444	Total
Beginning Cost	$            900,000	$       431,000
Direct Materials	$            155,000	$          13,800	$         252,000
Direct Labor	$            122,400	$          43,200	$         138,000
Overhead	$              60,000	$          22,000	$           70,000
Total Cost	$        1,237,400	$       510,000	$         460,000
Units produced	20000	15000	5000
Cost per unit	$                61.87	$            34.00	$             92.00
Units sold	15000	12000	4500
Cost of Goods Sold	$            928,050	$       408,000	$         414,000	$ 1,750,050
Finished Inventory	$            309,350	$       102,000	$           46,000	$     457,350