Question

Question 8

Red Fire Inc. produces fire trucks. The company uses a normal job-order costing system to calculate its cost of goods manufactured. The company’s policy is to price its job at cost plus 30% markup. On January 1, 2020, there was only one job in process, with the following costs:

Questions Red Fire Inc. produces fire trucks. The company uses a normal job-order costing system to calculate its cost of goods manufactured. The company's policy is to price its job at cost plus 30% markup. On January 1, 2020, there was only one job in process, with the following costs: Job 200 Direct materials $13,700 Direct labour 18,000 Applied overhead 27,000 Total $58,700 The following balances were taken from the company's general ledger as of January 1, 2020: Direct materials inventory $45,900 $ Finished goods inventory (for Job 100) 85,400 During the year 2020, the following events occurred: Direct materials were purchased on account for $377,000 Two more jobs were started: Job 300 and Job 400. Direct materials and direct labour costs incurred by each job in process during the year 2020 were as follows: Job 200 Job 300 Job 400 Direct materials $150,400 $150,400 $45,900 $45,900 $35,500 Direct labour 132,400 45,900 26,000 The company incurred the following actual factory overhead during the year: Factory rent $135,000 Factory supplies 54,500 Indirect labour 85,040 Jobs 100 and 200 were sold. Jobs 200 and 300 were completed Calculate the total applied overhead for the year 2020. The factory overhead costs are applied to each job on the basis of direct labour dollars. . Total overhead applied LINK TO TEXT Prepare simple job cost sheets for jobs 200, 300, and 400 for the year ended December 31, 2020. Job No. 200 Total Revenue Direct labour Total cost Cost of completed job Direct materials Manufacturing overhead $ Job No. 300 V Job No. 400 LINK TO TEXT Determine whether the overhead is over-applied or under-applied. By how much? Manufacturing overhead applied: Overhead incurred during the month Manufacturing overhead applied overhead $ LINK TO TEXT Prepare a schedule of cost of goods sold, identifying both normal and adjusted cost of goods sold, for the year ended December 31, 2020. RED FIRE INC. Statement of Cost of Goods Sold For the Year Ended December 31, 2020 V LINK TO TEXT Calculate the selling price of Job 200. Selling price of Job 200 LINK TO TEXT Cakulate the ending balances as of December 31, 2020, for the following accounts: Direct Materials and Work in Process Direct materials Work in process

Answer 1

Overhead rate = $27000 / $18000 = 150% of Direct Labor cost

Total Overhead applied = ($132400+45900+26000) x 150% = $306450

Job No. 200
Cost of Completed Job
Direct Material	$      164,100
Direct Labor	$      150,400
Overhead applied	$      225,600
Total Cost	$     540,100
Job No. 300
Cost of Completed Job
Direct Material	$        45,900
Direct Labor	$        45,900
Overhead applied	$        68,850
Total Cost	$     160,650
Job No. 400
Cost of Work in process
Direct Material	$        35,500
Direct Labor	$        26,000
Overhead applied	$        39,000
Total Cost	$     100,500

Overhead incurred	$      274,540
Manufacturing Overhead applied	$      306,450
Overapplied Overhead	$      (31,910)

Schedule of Cost of Goods Sold
Finished Goods Inventory, Beginning	$        85,400
Cost of Goods Manufactured	$      700,750
Cost of Goods Available for sale	$      786,150
Less : Finished Goods Inventory, Ending	$      160,650
Unadjusted Cost of goods sold	$     625,500
Less : Overapplied Overhead	$      (31,910)
Adjusted Cost of goods sold	$     593,590

Selling Price of Job 200 = $540100 x 130% = $702,130

Ending Balances
Direct Material = $45900+377000-(150400+45900+35500) = $191100
Work in process = $100500

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