Question

Ensign Landscape Design designs landscape plans and plants the materials for clients. On April 1, there were three jobs in process - Job 39, 40 and 41. During April, two more jobs were started 42 and 43. By April 30, Jobs 39 and 40 were completed and sold; Jobs 41 and 42 were completed and not sold; and Job 43 was not completed. Direct labor is $10/hour. Overhead is applied at the rate of $32 per direct labor hour. Jobs are sold at cost plus 30%. Selling and administrative expenses for April totaled $4,575.

	Job 39	Job 40	Job 41	Job 42	Job 43
Balance 4/1	540	3400	2990	-	-
Direct Materials	700	560	375	3500	6900
Direct Labor	500	600	490	2500	3000

#1. Calculate the ending balance in Work in Process as of 4/30 and Cost of Good Sold for April.

#2. Construct an income statement for Ensign Landscape Design for the month of April.

Answer 1

Job Cost sheet

	Job 39	Job 40	Job 41	Job 42	Job 43
Balance 4/1	540	3400	2990
Direct materials	700	560	375	3500	6900
Direct labor	500	600	490	2500	3000
Overhead	1600	1920	1568	8000	9600
Total	3340	6480	5423	14000	19500

1) Ending work in process = 19500

Cost of goods sold for April = 3340+6480 = 9820

2) Income statement

Sales (9820*1.3)	12766
Cost of goods sold	9820
Gross profit	2946
Selling and administrative expense	-4575
Income from operation	-1629