Question

Exercise 4-49: Assume Direct Labor workers make $20 per hour, so with the given labor cost per job, you can determine the number of hours worked. CHANGE the Exercise to say that Overhead is applied at the rate of $32 per direct labor hour. ALSO CHANGE to say that Job #39 and Job #40 were completed and sold, while Job #41 and Job #42 are complete but not sold, and Job #43 is not completed yet.

Ensign Landscape Design designs landscape plans and plants the material for clients. On April 1, there were three jobs in process, Jobs 39, 40, and 41. During April, two more jobs were started, Jobs 42 and 43. By April 30, Jobs 40, 41, 43 were completed and sold. The following data were gathered:

                                            Job 39                   Job 40                Job 41      Job 42    Job 43

Balance, April 1                   540                          3400                  2990    _    _

Direct Materials    700 560                     375            3500 6900

Direct Materials                       500                       600                    490            2500      3000

Overhead is applied at the rate of 110% of direct labor cost. Jobs are sold at cost plus 30%. Selling and administrative expenses for April totaled 4,575

2. Calculate the ending balance in Work in Process (as of April 30) and Cost goods sold for April

3. Construct an income statement for Ensign Landscape Design for the month of April.

Answer 1

1
		Job 39	Job 40	Job 41	Job 42	Job 43
	Balance, April 1	540	3,400	2,990	-	-
	Direct Materials	700	560	3,750	3,500	6,900
	Direct Labor	500	600	490	2,500	3,000
	Applied overhead (Labor cost x 110%)	550	660	539	2,750	3,300
	Total Costs	2,290	5,220	7,769	8,750	13,200
2	Work in Process as of April 30	11,040
	(2,290 + 8,750)
	Cots of Goods Sold	26,189
	(5,220 + 7,769 + 13,200)
3	Sales (COGS x 1.3)	34,046
	Less: Cost of Goods Sold	26,189
	Gross Margin	7,857
	Less: Selling and administrative expenses	4,575
	Operating income	3,282