Question

On September 1, two jobs were in process at Pete's Patios. Details of the jobs follow Direct Direct Labor Job Number Materials $1,040 $ 430 PP-24 670 PP-30 1,600 Materials Inventory on September 1 totaled $5,490, and $678 worth of materials was purchased during the month. Indirect materials of $90 were withdrawn from materials inventory. On September 1, finished goods inventory consisted of two jobs, PP-12, costing $2,304 and PP-14, with a cost of $980. Costs for both jobs were transferred to Cost of Services Billed during the month. Also during September, Jobs PP-24 and PP-30 were completed. Completing Job PP-24 required an additional $1,290 in direct labor The completion costs for Job PP-30 included $686 in direct materials and $3,700 in direct labor. Pete's Patios used a total of $1,846 of direct materials (excluding the $90 indirect materials) during the period, and total direct labor costs during the month amounted to $8,150. Overhead has been estimated at 50 percent of direct labor costs, and this relation has been the same for the past few years. Required: Compute the costs to Jobs PP-24 and PP-30 and the balances in the September 30 inventory accounts. Cost to complete PP-24 Cost to complete PP-30 Balance of Materials Inventory as of September 30 Balance of Work-in-Process as of September 30 Balance of Finished Goods Inventory as of September 30

Answer 1

Solution:

Cost to  Complete PP-24 = additional direct labor + Overhead = $1290 + ($1290*50%) = $1,935

Cost to  Complete PP-30 = additional direct Material + labor + Overhead = $686 + $3700 + ($3700*50%) = $6,236

Material Inventory as of Sept. 30th = Beginning Materials inventory + purchases - Indirect material used - Direct material used

= $5490 + $678 - $90 - $1846 = $4,232

PP-24 and PP-30 has been Completed, therefore, Balance of Work-in-Process as of Sept. 30th = Cost incurred during the period - Cost to complete Job-24 and PP-30

=(1846+ $8150 + $8150*50%) - $1935 - $6236 = $14071 - $1935 - $6236 = $5,900

Balance of Finished Goods Inventory as of Sept. 30th = Beginning Work in process balance of PP-24 and PP-30 + Cost to complete PP-24 and PP-30

= ($1040+ $430+$430*50%) + ($670+ $1600 + $1600*50%) + $1935 + $6236 = $1685 + $3070 + $1935 + $6236 = $12,926