Question

The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs. Direct materials Direct labor Overhead Job 602 $1,400 900 450 Job 603 $3,600 1,380 690 Job 604 $2,600 2,000 1,000 Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $600; direct labor, $150; and overhead, $75. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company's predetermined overhead rate did not change over these months.) Required: 1. What is the cost of the raw materials used in June for each of the three jobs and in total? 2. How much total direct labor cost is incurred in June? 3. What predetermined overhead rate is used in June? 4. How much cost is transferred to finished goods inventory in June?

Answer 1

1) Direct Material	Job 602	Job 603	Job 604	Total
May Cost	600	0	0	600
June Cost	800	3,600	2,600	7000
Total Cost	1,400	3,600	2,600	7600
2) Direct Labour
	Job 602	Job 603	Job 604	Total
May Cost	150	0	0	150
June Cost	750	1,380	2,000	4130
Total Cost	900	1,380	2,000	4280
3) Predetermined overhead rate	Job 602	Job 603	Job 604
Overhead (A)	450	690	1,000
Direct Labour (B)	900	1,380	2,000
Predetermined overhead rate	50%	50%	50%
4)
Job	Direct Materials	Direct Labor	Applied Overhead	Total Cost	Cost Transferred to Finished Goods	Cost of Ending WIP
602	$     1,400.00	$     900.00	$            450.00	$             2,750.00	$                2,750.00
603	$     3,600.00	$  1,380.00	$            690.00	$             5,670.00	$                5,670.00
604	$     2,600.00	$  2,000.00	$         1,000.00	$             5,600.00		$           5,600.00
Total	$     7,600.00	$  4,280.00	$         2,140.00	$           14,020.00	$                8,420.00	$           5,600.00

Job 603 3600 1380 690 Job 604 2600 2000 1000 1 The computer workstation furniture manuf Job 602 3 Direct materials 1400 4 Direct labor 900 5 Overhead 450 6 Job 602 was started in production in May, 7 Required: 8 1) What is the cost of the raw materials us 9 2) How much total direct labor cost is incui 10 3) What predetermined overhead rate is u: 11 4) How much cost is transferred to finished 12 Job 603 Job 604 13 1) Direct Material 14 May Cost 15 June Cost 16 Total Cost Job 602 600 =B3-B14 1 =B14+B15 =C3 Total =B14+C14+D14 =B15+C15+D15 =B16+C16+D16 =D3 D14+D15 C14+15 17 18 2) Direct Labour 19 Job 602 Job 603 Job 604 150 820 Total =B20+C20+D20 =B21+C21+D21 =B22+C22+D22 =B4-B20 =B20+B21 =C4 =C20+C21 =D4 =D20+D21 20 May Cost 21 June Cost 22 Total Cost 23 24 3) Predetermined overhead rate 25 Overhead (A) 26 Direct Labour (B) 27 Predetermined overhead rate 28 29 4) Job 602 450 900 =B25/B26 Job 603 690 1380 =C25/C26 Job 604 1000 2000 =D25/D26 Cost of Ending WIP 30 Job 31 602 32 603 33 604 34 Total Direct Materials =B16 =C16 =D16 =SUM(B31:B33) Direct Labor =B22 =C22 =D22 =SUM(C31:C33) Applied Overhead =C31*B27 =C32*C27 =C33*D27 =SUM(D31:033) Total Cost =B31+C31+D31 =B32+C32+D32 =B33+C33+D33 =SUM(E31:E33) Cost Transferred to Finished Goods =E31 =E32 =SUM(F31:F33) =E33 =SUM(G31:G33)