Question

On March 1 a dressmaker starts work on three custom- designed wedding dresses. The company uses job order costing and applies overhead to each job (dress) at the rate of 40% of direct materials costs. During the month, the jobs used direct materials as shown below. Job 1 $5 000 Job 2 $7000 Job 3 $1.500 Direct materials used During the month, the jobs used direct labor as shown below. Jobs 1 and 3 are not finished by the end of March, and Job 2 is finished but not sold by the end of March. Direct labor used Job $9,000 Job 2 $4.000 Job 3 $3.000 Determine the amounts of direct materials, direct labor, and factory overhead applied that would be reported on job cost sheets for each of the three jobs for March. JOB COST SHEET I Job Job 2 Jobs Direct Direct labor Factory overhead Total 2. Determine the total dollar amount of Work in Process Inventory at the end of March. Work in the process inventory account * Determine the total dollar amount of Finished Goods Inventory at the end of March. Assume the company has no beginning Work in Process or Finished Goods inventories. Finished goods inventory account

Answer 1

JOB COST SHEET
	Job 1	Job 2	Job 3
Direct materials	$5,000	$7,000	$1,500
Direct labor	$9,000	$4,000	$3,000
Factory overhead   [Refer working note 1]	$2,000	$2,800	$600
Total	$16,000	$13,800	$5,100

.

.

2. Ending work-in process inventory [Refer working note 2]	$21,100
3. Ending goods inventory                  [Refer working note 3]	$13,800

.

.

Working note 2 - Computation of ending work-in process inventory Since the Job 1 and the Job 3 are not finished at the end of March, Job 1 & Job 3 are considered as work-in process inventory. Therefore, Work-in process inventory = Total cost incurred for Job 1 + Total cost incurred for Job 3 = $16,000+ $5,100 = $21,100 Working note 3 - Computation of ending finished goods inventory As the Job 2 is the only job which is finished but unsold at the end of the March, Job 2 is considered as the finished good inventory. Therefore, Finished goods inventory = Total cost incurred for Job 2 = $13,800