Question

Activity-Based Costing, Unit Cost, Ending Work-in-Process Inventory, Journal Entries Feldspar Company uses an ABC system to apply overhead. There are three activity rates: Setting up $20 per setup Machining $5.10 per machine hour Other overhead 75% of direct labor cost During September, Feldspar worked on three jobs. Data relating to these jobs follow: Job 13-280 Job 13-281 Job 13-282 Units in each order 200 520 120 Units sold 200 120 Materials requisitioned $4,720 $3,700 $5,600 Direct labor cost $2,000 $4,700 $800 Machine hours 100 Number of setups 20 During September, Jobs 13-280 and 13-282 were completed and transferred to Finished Goods Inventory. Job 13- 280 was sold by the end of the month Job 13-281 was the only unfinished job at the end of the month.

Answer 1

Solution: Part 1: Direct material Direct labor Overhead applied (Note 1) Total cost / units per unit cost Job 13-280 Job 13-282 4720 5600 2000 800 2308 4335 9028 10735 2001 45.14 89.46 120 Part 2: Direct material Direct labor Overhead applied (Note 1) Ending bal. In WIP 3700 4700 4335 12735 Part 3: a) Finished goods inventory Work in process inventory (9028+10735) 19763 19763 b1) cost of goods sold Finished goods inventory 9028 9028 13542 b2) Account receivable Sales revenue (9028*150%) 13542

Note 1: Job 13-280 Activity Activity Rate Activity driver incurred Overhead assigned c=a*b Job 13-281 Job 13-282 Activity Activity driver Overhea driver Overhead incurred incurred assigned Id assigned d e =a*d f g=a*f 15 300 250 500 100 5101 401 204 4700 3525 8001 4335) 1304 400 setting up machining other overhead 20.00 per setup 5.10 per MH 75% of DLC 801 2000 408 1500 2308 600