Question

Angry​ Birds, Inc. designs and builds retaining walls for individual customers. On August​ 1, 2 jobs were in​ process: Level 1 with a beginning balance of​ $12,000 and Level 2 with a beginning balance of​ $8,600. During​ August, Level 3 and Level 4 were started. Levels 1 and 2 were sold at cost plus 40​% during August. All other jobs remained in process at month end.

The company applies manufacturing overhead at a rate of ​$9 per direct labor hour. Direct labor wages average ​$10 per hour. The following additional cost information is available for​ August:

	Level 1	Level 2	Level 3	Level 4
Direct Materials	​$1,200	​$8,000	​$2,100	​$3,000
Direct Labor	​$1,800	​$4,800	​$360	​$1,200

The sales staff is paid a​ 2% commission on all sales for the period. The company closes out the total​ over/underapplied manufacturing overhead to Cost of Goods Sold at the end of each month. Calculate the following given actual MOH of​ $8,200 incurred during August.

The amount of MOH applied to all jobs in process during August equals $__________.

The adjusted COGS reported on the Income Statement for August equals $_________.

The gross profit reported on the Income Statement for August equals $__________.

The ending work in process balance reported on the Balance Sheet for August equals $_________.

Round final answers to the nearest dollar.

Answer 1

Job Cost Sheet
			Level 1	Level 2	Level 3	Level 4	Total
Labour hours worked	180	480	36	120	816
Beginning cost		12,000	8,600			20,600
Current cost:
Material			1200	8000	2100	3000	14300
Labour cost		1800	4800	360	1200	8160
Overheads applied		1620	4320	324	1080	7344
Total Current cost		4620	17120	2784	5280	29804
Total Cost of each jobs	16,620	25,720	2,784	5,280	50,404
Req a.
Amount of Overheads applied to all Jobs:
Overheads applied to Lvel1		1620
Overheads applied to Level 2		4320
Overheads applied to Level 3		324
Overheads applied to Level 4		1080
Overheads applied to all the Jobs	7,344
Req b.
Under-applied overheads
Overheads incurred			8200
Overheads applied			7344
Under-applied overheads		856
Adjusted Cost of goods sold:
Cost of Level 1 Job			16620
Cost of Level 2 Job			25720
Unadjusted COGS			42340
Add: Under-applied OH		856
Adjusted Cost of goods sold:		43,196
Reqc.
Sales revenue
Level 1 (16620+40%)		23268
Level 2 (25720 +40%)	36008	59276
Less: Unadjusted COGS		-43196
Gross Profit			16080
Req d.
Ending WIP:
Cost of Level -3 Job			2,784
Cost of Level -4 Job			5,280
Ending WIP:			8,064