Question

Furr Fabricators produces protective covers for smart phones. Since the covers must be customized to each smart phone model, Furr uses a job order costing system. On September 1, the company reported the following inventory balances: Direct Materials $8.500 Work in Process $34,600 Finished Goods $53,200 1. 2. 3. During September, the following events occurred: Furr purchased direct materials costing $372,000 on account Furr used $364,000 in direct materials in production. Furr's employees clocked 20,000 direct labor hours at an average wage rate of $15 per direct labor hour. 4. The company incurred $428,000 in manufacturing overhead, including $77,200 in indirect labor costs. Using direct labor hours as the application base, the company applied $420,000 of manufacturing overhead to jobs worked on in September The company completed production on jobs costing $1,040,000 The company delivered jobs costing $990,000 to customers, 5. 6. 7. Calculate the ending September balance of the Direct Materials, Work in Process, and Finished Goods Inventory accounts. Ending September Balance Direct Materials $

Answer 1

Solution:

1.)

Direct materials	$16,500
Direct labor	$78,600
Finished goods	$103,200

Direct Materials		Work in process		Finished goods
Beg. Bal.	$8,500	Beg. Bal.	$34,600	Beg. bal	$53,200
Purchases	$372,000	Direct materials used in production	$364,000	add: Completed jobs	$1,040,000
Direct materials available for production	$380,500	Direct labor	$300,000 ($15 × 20,000 hours)	jobs available for sale	$1,093,200
Less: direct materials used in production	-$364,000	Applied manufacturing cost	$420,000	less: cost of jobs sold	- $990,000
Ending balance	$16,500	Sub total	$1,118,600	Ending balance	$103,200
		Less: completed job	-$1,040,000
		Ending balance	$78,600

2.)

Calculation of total manufacturing costs for September:

Cost of direct materials	$364,000
Direct labor	$300,000
Applied manufacturing overhead	$420,000
Total manufacturing cost	$1,084,000

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