Question

Swifty, Inc. manufactures ergonomically designed computer furniture. Swifty uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: Job CC73 Computer Caddy, 23,000 units, $970,000 accumulated cost Job CH291 Chair, 16,000 units, $434,000 accumulated cost Job PS812 Printer stand, 30,000 units, $252,000 accumulated cost Total cost $1,656,000 On November 30, Swifty’s Raw Materials Inventory account totaled $676,000, and its Finished Goods Inventory totaled $3,476,400. Swifty applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totaled $4,650,000, and the company planned to use 930,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 860,000 machine hours, total manufacturing overhead amounted to $4,294,500, and Cost of Goods Sold was $8,790,250. For the purposes of this problem, ignore year-end disposition of over / under applied overhead. Swifty purchased $638,000 in raw materials in December and incurred the following costs for jobs in process that month: Job CC723, $197,000 Materials Issued, 19,000 Machine Hours, 14,200 Direct Labor Hours, $126,400 Direct Labor Cost Job CH291 $15,100 Materials Issued, 4,600 Machine Hours, 4,000 Direct Labor Hours, $48,200 Direct Labor Cost Job PS812 $240,000 Materials Issued, 24,800 Machine Hours, 16,300 Direct Labor Hours, $212,500 Direct Labor Cost DS444 $258,000 Materials Issued, 19,000 Machine Hours, 13,300 Direct Labor Hours, $144,000 Direct Labor Cost The following jobs were completed in December and transferred to the Finished Goods Inventory: CC723 Computer caddy, 23,000 units CH291 Chair, 16,000 units DS444 Desk 7,000 units. Assume that Swifty sold 15,000 computer caddies, 12,000 chairs, and 4,500 desks in December.

Calculate the total manufacturing cost for December, the cost of goods manufactured for December, the balance in the Work in Process Inventory account on December 31.

Calculate Cost of Goods Sold for the month of December and the ending Finished Goods Inventory balance on December 31.

Answer 1

Cost Sheet
	Job # CC723		Job # CH291		Job # PS812		Job # DS444
Beginning balance $		970000		434000		252000		0
Direct materials		197000		15100		240000		258000
Direct labor cost		126400		48200		212500		144000
Manufacturing overheads*	(19000x$5)	95000	(4600x$5)	23000	(24800x$5)	124000	(19000x$5)	95000
Total cost $		1388400		520300		828500		497000

*Pre-determined manufacturing overhead rate = Total estimated manufacturing overheads / Estimated machine hours = $4650000/930000 hours = $5 per machine hour

		Nov. 30										Dec. 31
Job No.	Quantity	Work in	Direct	Direct	Factory	Total	Unit	Units	Cost of	Finished Goods		Work in
		Process	Materials	Labor	Overhead	Cost	Cost	Sold	Goods Sold	Units	$	Process
CC723	23000	970000	197000	126400	95000	1388400	60.37	15000	905550	8000	482960
CH291	16000	434000	15100	48200	23000	520300	32.52	12000	390240	4000	130080
PS812	30000	252000	240000	212500	124000	828500	27.62	0	0	0	0	828500
DS444	7000	0	258000	144000	95000	497000	71.00	4500	319500	2500	177500
Total $		1656000	710100	531100	337000	3234200			1615290		790540	828500

Important: The unit cost is rounded off to 2 decimal places in the absence of specific instructions regarding rounding off. Kindly round off as required. Any other rounding off will cause the cost of goods sold and finished goods inventory valuation to change.

Total manufacturing cost for December = Direct materials + Direct labor + Manufacturing overheads = $710100 + $531100 + $337000 = $1578200

Cost of goods manufactured for December = Total manufacturing cost + Beginning work in process - Ending work in process = $1578200 + $1656000 - $828500 = $2405700

Balance in work in process inventory account on December 31: $828500 (Job # PS812)

Cost of goods sold for December: $1615290

Finished goods inventory balance on December 31 = 3476400 + 790540 = $4266940