Question

Kenworth Company uses a job-order costing system. Only three jobs—Job 105, Job 106, and Job 107—were worked on during November and December. Job 105 was completed on December 10; the other two jobs were still in production on December 31, the end of the company’s operating year. Data from the job cost sheets of the three jobs follow:

	Job Cost Sheet
	Job 105			Job 106			Job 107
November costs incurred:
Direct materials	$	20,500		$	13,300		$	0
Direct labour	$	17,000		$	11,000		$	0
Manufacturing overhead	$	23,800		$	15,400		$	0
December costs incurred:
Direct materials	$	0		$	10,200		$	29,300
Direct labour	$	7,000		$	8,000		$	14,000
Manufacturing overhead		?			?			?

The following additional information is available:

1. Manufacturing overhead is applied to jobs on the basis of direct labour cost.
2. Balances in the inventory accounts at November 30 were as follows:

Raw Materials	$	52,000
Work in Process		?
Finished Goods	$	105,000

Required:

1.

What is the beginning balance for the work in process t account ?

5. Determine the balance at December 31 in the Work in Process inventory account. How much of this balance consists of costs charged to Job 106? Job 107?

5. Determine the balance at December 31 in the Work in Process inventory account. How much of this balance consists of costs charged to Job 106? Job 107? Answer is not complete. Job 106 Job 107 Total Direct materials Direct labour Manufacturing overhead Total cost L L 0 $ $ 0 $ 0

Answer 1

Solution 1:

Beginning balance of WIP account = Cost of job 105 + cost of job 106

= ($20,500 + $17,000 + $23,800) + ($13,300 + $11,000 + $15,400) = $101,000

Solution 5:

Computation of Work in Process at December 31
	Job 106	Job 107	Total
Direct materials	$23,500.00	$29,300.00	$52,800.00
Direct labor	$19,000.00	$14,000.00	$33,000.00
Overhead (140% of DL cost)	$26,600.00	$19,600.00	$46,200.00
Total	$69,100.00	$62,900.00	$132,000.00