Question

At the beginning of June, Rhone Company had two jobs in process, Job 44 and Job 45, with the following accumulated cost information:

	Job 44	Job 45
Direct materials	$5,000	$1,200
Direct labor	1,700	2,900
Applied overhead	935	1,595
Balance, June 1	$7,635	$5,695

During June, two more jobs (46 and 47) were started. The following direct materials and direct labor costs were added to the four jobs during the month of June:

	Job 44	Job 45	Job 46	Job 47
Direct materials	$2,250	$7,140	$1,650	$1,850
Direct labor	840	6,380	960	660

At the end of June, Jobs 44, 45, and 47 were completed. Only Job 45 was sold. On June 1, the balance in Finished Goods was zero.

	Required:
1.	Calculate the overhead rate based on direct labor cost. Round to three decimal places.
2.	Prepare a brief job-order cost sheet for the four jobs. Show the balance as of June 1 as well as direct materials and direct labor added in June. Apply overhead to the four jobs for the month of June, and show the ending balances.
3.	Calculate the ending balances of Work in Process and Finished Goods as of June 30.
4.	Calculate the Cost of Goods Sold for June.

Answer 1

1) calculate the overhead rate based on direct labour cost

we don't know pre determined OVERHEAD rate,it should be Calculated by using any of the job either job 44or job 45

we use job 44

PRE DETERMINED OVERHEAD rate=applied overhead/direct labour cost

   =$935/$1700×100=55%

also pre determined OVERHEAD rate same/identifical for job 45

=$1595/$2900×100=55%

2) prepare job cost sheet for 4jobs

Particular	job44	job45	job46	job47
Direct material	$2250	$7140	$1650	$1850
Direct labour	$840	$6380	$960	$660
Applied overhead [direct labour cost×55%]	[$840×55%] $462	[$6380×55%] $3509	[$960×55%] $528	[$660×55%] $363
Beginning balance	$7635	$5695
Total June 30	$11187	$22724	$3138	$2873

3) calculate ending inventory and finished goods

At the end of June job 44,45,47 were completed and remaining job46 balance still working in process

Therefore

Ending inventory job46= $3138

and remaining three jobs (44,45,47) were completed and transferred to finished goods

And later on job 45sold

Therefore

Cost of finished goods job(44,47)=$11187+$2873=$14060

4) calculation of cost of goods sold for June

only job 45 sold during the month

Therefore cost of goods sold =$22724

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