Question

Wyatt & Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of January. Listed below are data concerning the two audit jobs conducted in January. Ryan Sara

Direct materials $830 $600

Auditor labor costs $4,900 $7,600

Auditor hours 62 48

Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $50 per auditor hour. The Sara job is the only incomplete job at the end of January. Actual overhead for the month was $11,100.

Calculate the ending balance in the Work in Process Account at the end of January.

Answer 1

As the Sara - Job is incomplete, the cost incurred and allocated will be the balance of Work in process Account. As Ryan's incurred and allocated cost have been transferred.

Therefore, Calculation for balance of Work in Process Account is as follows :

Direct Materials = $ 600

Auditor Labour Cost = $ 7,600

Applied Overhead Cost = 48 x $ 50 = $ 2,400

Therefore, Ending WIP Balance = $ 10,600

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