Question

Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost On April 1, Sangvikar Company had the following balances in its inventory accounts: Materials Inventory $12,970 Work-in-Process Inventory 21,510 Finished Goods Inventory 8,680

3. Calculate the ending balance of Work in Process as of April 30. When required, round your answer to the nearest dollar. $ 4. Calculate the cost of goods sold for April. When required, round your answer to the nearest dollar. $ 5. Assuming that Sangvikar prices its jobs at cost plus 25 percent, calculate the price of the one job that was sold during April. When required, round your answer to the nearest dollar.

Answer 1

1. Predetermined overhead rate based on direct labor cost = 70% of direct labor cost.

Predetermined overhead rate based on direct labor cost = Applied overhead / Direct labor cost

Job 114:
Applied Overhead / Direct Labor
$1,260 / $1,800 = 70%

Job 115:
Applied Overhead / Direct Labor
$1,134 / $1,620 = 70%

Job 116:
Applied Overhead / Direct Labor
$3,136 / $4,480 = 70%

2. Ending balance of each jobs as of April 30:
Job 114 = $24,414
Job 115 = $0 (sold out)
Job 116 = $18,488

Opening Materials Purchase Job 114 Job 115 Job 116 $2,388 Sold Out $2,995 $16,450 $5,330 $18,838 $8,325 $3,360 $6.100 $2,238 $4,063 Direct Labor Actual Overhead Balance $24,436 $18,488

Direct labor:
Job 114 = Opening balance + Labor cost during April
= $1,800 + ( 130 × $12) = $1,800 + $1,560 = $3,360

Job 116 = Opening balance + Labor cost during April
= $4,480 + ( 90 × $18) = $4,480 + $1,620 = $6,100

Actual Overhead % = Actual Overhead / Direct Labor

Actual Overhead = $4,415

Direct Labor = (130 × $12) + (230 × $15) + (90 × $18) = $6,630

Actual Overhead % = $4,415 / $6,630 = 66.6%

Actual overhead:

Job 114 = 66.6% of direct labor
= $3,360 × 66.6% = $2,238

Job 116 = 66.6% of direct labor
= $6,100 × 66.6% = $4,063

3. Ending balance of work in process as of April 30 = $42,902

Ending balance of WIP = Job 114 ending balance + Job 116 ending balance
= $24,414 + $18,488 = $42,902

4. Cost of good sold = $23,764

Opening Materials Purchases Job 115 $2,697 $12,620 $15,317 $5,070 $3,377 $23,764 Direct Labor Actual Overhead Cost of Goods Sold

Direct labor:
Job 115 = Opening balance + Labor cost during April
= $1,620 + ( 230 × $15) = $1,620 + $3,450 = $5,070

Actual overhead:

Job 115 = 66.6% of direct labor
= $5,070 × 66.6% = $3,377

5. Price of job sold = Cost + 25%
= $23,764 + 25% of $23,764 = $29,705.