Question

Part 1: Information to use in completing is below and the requirements follow where you will answer the questions.

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 $3,000
Job 25 $2,000

During January, the following activities took place:
1. Started jobs 26 and 27.
2. Purchased raw materials in January: $12,000
Requisitioned(or used) the following raw materials to the specific jobs:
Job 21 $2,000
Job 25 $4,000
Job 26 $1,000
Job 27 $3,000

3. Incurred January manufacturing payroll:
Direct Labor
Job 21 $750
Job 25 $2,000
Job 26 $900
Job 27 $1,500

Indirect labor $500

4. Incurred additional manufacturing overhead costs for January:
Production equipment rent. 800
Manufacturing supplies purchased and used. 750
Factory utilities. 525

5. Applied manufacturing overhead using a predetermined rate based on predicted annual overhead
and predicted annual direct material cost as follows:
Predicted Annual Overhead $25,000
Predicted Annual Direct Material cost $100,000

6. Completed jobs 26 and 27.

7. Customer for Job 27 picked up completed job and was billed the following:
Job 27 11,000

8. The company had the following period costs that they incurred:
Sales commissions $2,000
Administrative salaries $1,000

Determine the ending Work-In-Process Inventory at the end of January and provide the number of the Jobs still in Work-in-Process at the end of January and the determine total cost of ending work in process for January. Determine the Finished Goods for January and provide the number of the Jobs in Finished Goods at the end of January and determine the total cost of ending finished goods for January. Determine the underapplied or overapplied manufacturing for January.

Answer 1

Ending work-in-process inventory: $15250

Job 21	$         6,250
Job 25	$         9,000
	$       15,250

Ending finished goods: $2150

Job 26

$         2,150

Manufacturing overhead applied		$       2,500
Manufacturing overhead incurred:
Indirect labor	$             500
Production equipment rent	$             800
Manufacturing supplies used	$             750
Factory utilities	$             525
Total manufacturing overhead incurred		$       2,575
Underapplied manufacturing overhead $		$             75

Working:

Predetermined overhead rate = Predicted annual overhead/Predicted annual direct material cost = $25000/$100000 = 25% of direct materials cost

	Job 21	Job 25	Job 26	Job 27
Beginning balance	3000	2000	0	0
Direct materials	2000	4000	1000	3000
Direct labor	750	2000	900	1500
Manufacturing overhead	500	1000	250	750
Total cost $	6250	9000	2150	5250
	WIP		FG	COGS