Question

Part 1: Below is the company Information that you will use in completing Part 1. The requirements are listed after this company information and you should provide your solution below each of the requirements. Sheds, Inc. designs and builds sheds and outbuildings for individual customers. The company uses a job cost system and treats each customer's order as a separate job. At the beginning of January the company had the following raw material inventory: $500 At the beginning of January the company had the following work-in-process inventories: Job 21 $1,000 Job 25 $3,000 During January, the following activities took place: 1. Started jobs 26 and 27. 2. Purchased raw materials in January: $13,000 Requisitioned (or used) the following raw materials to the specific jobs: Job 21 $4,000 Job 25 $1,000 Job 26 $2,000 Job 27 $3,000 3. Incurred January manufacturing payroll: Direct Labor Job 21 $700 Job 25 $2,000 Job 26 $900 Job 27 $1,600 Indirect labor $400 4. Incurred additional manufacturing overhead costs for January: Production equipment rent $700 Manufacturing supplies purchased and used $500 Factory utilities $300 5. Applied manufacturing overhead using a predetermined rate based on predicted annual overhead and predicted annual direct material cost as follows: Predicted Annual Overhead $30,000 Predicted Annual Direct Material cost $150,000

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer Part 1) Predetermined Overhead Rate = Predicted Annual Overhead / Predicted Annual Direct Material Cost *100 = 30000 / 150000 * 100 = 20% - Thus the correct answer is predetermined overhead rate - 20% Part 2) Job 26 Job 27 Job 21 Job 25 1000 3000 Beginning Balance 1 Current Costs: 2 Direct Material 3 Direct Labour 4 Applied Overheads 5 total 7 Part 3) 4000 700 800 6500 1000 2000 200 6200 2000 9001 400 3300 3000 1600 600 5200 Job 21 Job 26 $ 6,500$ 3,300 $ Total 9,800 Cost of ending Work in Process Inventory 1|Part 4) Job 27 $ 5,200 Total $ 5,200 3 Cost of ending Finished Goods 5 As per HomeworkLib policy we are required to solve the first 4 parts only. For remaining parts you have to post separate quest