Question

Example 6: Assume the following information relates to the L Company for the month of June: Job 505 Job 506 Job 507 | In Process June 1: Materials $40.000 $20,000 $0 Labor 60.000 40.000 10 Overhead 90.000 60.000 10 Costs added in June: Materials 10,000 40,000 40.000 Labor 40,000 40,00 80,000 Overhead Actual Overhead costs incurred in June amounted to $230,000. Jobs 505 and 506 were completed and transferred out in June. Overhead is applied using a predetermined overhead rate. From the above data, compute: The cost of the June 1 work in process inventory The total amount of overhead assigned to production in June assuming no change in the overhead rate employed The cost of Job 505 when completed The cost of the goods completed and transferred The cost of the June 30 work in process inventory

Answer 1

1	The cost of June 1 work in Process inventory			$310,000
	($40,000 + $60,000 + $90,000 + $20,000 + $40,000 + $60,000)
2	Amount of overhead assigned to production in June			$240,000
	($60,000 +$60,000 + $120,000)
3	The cost of Job 505 when completed			$300,000
	($40,000 + $60,000 + $90,000 + $10,000 + $40,000 + $60,000)
4	The Cost of Goods completed in transferred			$560,000
5	The cost of June 30 work in Process inventory			$240,000
	($40,000 +$80,000 + $120,000)
	Working
		Job 505	Job 506	Job 507
	In Process June 1
	Materials	$40,000	$20,000	$0
	Labor	$60,000	$40,000	$0
	Overhead	$90,000	$60,000	$0
	Costs added in June
	Materials	$10,000	$40,000	$40,000
	Labor	$40,000	$40,000	$80,000
	Overhead	$60,000	$60,000	$120,000
		($40,000 x 1.5)	($40,000 x 1.5)	($80,000 x 1.5)