Question

Sunland, Inc. manufactures ergonomically designed computer furniture. Sunland uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: Job No. Item Units Accumulated Cost CC723 Computer caddy 24,000 $900,000 CH291 Chair 15,000 435,000 PS812 Printer stand 30,000 285,000 $1,620,000 On November 30, Sunland’s Raw Materials Inventory account totaled $680,000, and its Finished Goods Inventory totaled $3,456,400. Sunland applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totaled $5,000,000, and the company planned to use 1,000,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 870,000 machine hours, total manufacturing overhead amounted to $4,284,500, and Cost of Goods Sold was $8,790,250. For the pursposes of this problem, ignore year-end disposition of over / under applied overhead. Sunland purchased $648,000 in raw materials in December and incurred the following costs for jobs in process that month: Job No. Materials Issued Machine Hours Direct Labor Hours Direct Labor Cost CC723 $200,000 19,000 12,600 $125,400 CH291 $16,200 4,800 3,600 $48,200 PS812 $218,000 25,000 15,300 $209,500 DS444 $254,000 20,000 20,000 $149,000 The following jobs were completed in December and transferred to the Finished Goods Inventory: Job No. Item Units CC723 Computer caddy 24,000 CH291 Chair 15,000 DS444 Desk 8,000 (a) Calculate the total cost of each of the four jobs worked on in December. CC723 CH291 PS812 DS444 Total Cost $ $ $ $ (b) Calculate the total manufacturing cost for December. Total manufacturing cost $ (c) Calculate the cost of goods manufactured for December. Cost of goods manufactured $ (d) Calculate the balance in the Work in Process Inventory account on December 31. Balance in work in process $ (e) Assume that Sunland sold 15,000 computer caddies, 12,000 chairs, and 4,500 desks in December. Calculate Cost of Goods Sold for the month of December and the ending Finished Goods Inventory balance on December 31. (For computation purpose round per unit rates to 2 decimal places, e.g. 3.54. Round final answers to 0 decmial places, e.g. 45,000.) Cost of goods sold $ Finished goods inventory $

Answer 1

Estimated overhead rate =Estimated overhead /estimated machine hours

                                  = 5000000 / 1000000

                                 = $ 5per machine hours

	CC723	CH291	PS812	DS444
Direct material	200000	16200	218000	254000
Direct labor cost	125400	48200	209500	149000
Overhead applied ( actual machine hours*overhead rate)	19000*5=95000	4800*5= 24000	25000*5= 125000	20000*5=100000
Total cost incurred in December	420400	88400	552500	503000
Beginning work in process	900000	435000	285000	0
Total cost of Job	1320400	523400	837500	503000

b)

Total manufacturing cost incurred in December = 420400+88400+552500+503000= $ 1564300

c)

Beginning work in process inventory	1620000
Add:Total manufacturing cost incurred in December	1564300
Total work in process	3184300
less:work in process at end December 31	(837500)
cost of goods manufactured	2346800

Cost of Job PS812 (still in process at end) =Beginning cost+ cost during Dec

                        = 285000+ 552500

                        = 837500

d)Work in process inventory December 31: Cost of Job PS812 (still in process at end) =Beginning cost+ cost during Dec

                        = 285000+ 552500

                        = 837500

e)

	CC723	CH291	DS444
Total cost of Job[A]	1320400	523400	503000
Number of units	24000	15000`	8000
Unit cost	1320400/24000 =$ 55.02	523400/15000=34.89	62.88
cost of goods sold (unit cost*units sold)[B]	15000*55.02 =825300	12000*34.89 418680	4500*62.88=282960
Finished goods inventory [A-B]	1320400-825300 =495100	104720	220040