Question

Sheffield Fabricators produces protective covers for smart phones. Since the covers must be customized to each smartphone model. Sheffield uses a job order costing system. On September 1, the company reported the following inventory balances Direct Materials $25,500 Work in Process $153,000 Finished Goods $261,000 During September, the following events occurred: 1. Sheffield purchased direct materials costing $2,824,000 on account. 2. Sheffield used $436,000 in direct materials in production 3. Sheffield's employees clocked 20,000 direct labor hours at an average wage rate of $11.17 per direct labor hour. 4. The company incurred $184.000 in manufacturing overhead, including $25,000 in indirect labor costs. 5. Using direct labor hours as the application base, the company applied $164,000 of manufacturing overhead to jobs worked on in September. 6. The company completed production on jobs costing $859,000. 7. The company delivered jobs costing $1.083.000 to customers.

Answer 1

Solution

Sheffield Fabricators

1. Calculation of the ending September balances of the Direct Materials, Work in Process and Finished Goods Inventory accounts:

Direct Materials	$2,413,500
Work in Process	$117,400
Finished Goods	$37,000

Computations:

Direct Materials		Work in Process		Finished Goods
Beg. Balance	$25,500	Beg. Balance	$153,000	Beg. Balance	$261,000
Purchases	$2,824,000	Direct materials used in production	$436,000	add: completed jobs	$859,000
direct materials available for production	$2,849,500	Direct labor	$223,400	jobs available for sale	$1,120,000
Less: direct materials used in production	$436,000	Applied manufacturing overhead cost	$164,000	Less: cost of jobs sold	$1,083,000
Ending balance	$2,413,500	sub total	$976,400	Ending balance	$37,000
		Less: completed jobs	$859,000
		Ending balance	$117,400

Note – Direct labor cost = 20,000 hours x $11.17 per hour = $223,400

2. Calculation of total manufacturing costs for September:

Total manufacturing Costs –

schedule of Manufacturing Costs
Cost of direct materials used	$436,000
Direct labor	$223,400
Applied manufacturing overhead	$164,000
Total	$976,400