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	$12,980
Work-in-Process Inventory	21,490
Finished Goods Inventory	8,780

Work-in-process inventory is made up of three jobs with the following costs:

	Job 114	Job 115	Job 116
Direct materials	$2,366	$2,605	$3,674
Direct labor	1,800	1,400	4,140
Applied overhead	1,350	1,050	3,105

During April, Sangvikar experienced the transactions listed below.

1. Materials purchased on account, $29,470.
2. Materials requisitioned: Job 114, $16,690; Job 115, $12,010; and Job 116, $4,930.
3. Job tickets were collected and summarized: Job 114, 150 hours at $12 per hour; Job 115, 230 hours at $15 per hour; and Job 116, 100 hours at $17 per hour.
4. Overhead is applied on the basis of direct labor cost.
5. Actual overhead was $4,285.
6. Job 115 was completed and transferred to the finished goods warehouse.
7. Job 115 was shipped, and the customer was billed for 125 percent of the cost.

Required:

1. Calculate the predetermined overhead rate based on direct labor cost.

% of direct labor cost

2. Calculate the ending balance for each job as of April 30. When required, round your answers to the nearest dollar. Use your rounded answers in subsequent computations, if necessary.

	Ending Balance
Job 114	$
Job 115	$
Job 116	$

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

Solution: 1) predetermined overhead rate=Overhead applied/Direct labor cost 350/1800 75.00% 2) Job 114 Job 115 Job 116 2366 1800 1350 5516 2605 1400 1050 5055 3674 4140 3105 10919 Cost in beg. WIP Direct materials Direct labor Applied overhead Beginning Work-in-Process Inventory Cost incurred in period year Direct materials Direct labor** Applied overhead Cost incurred in period year Balance as on April 30 16690 12010 4930 1800 3450 1700 1350 2588 1275 19840 18048 7905 25356 23103 18824 230 **Direct labor incurrend in current period Hours worked x rate per hour Direct labor 150 12 1800 15 3450 100 17 1700

3) Job 114 Job 116 ending balance of Work in Process as of April 30. 25,356 18,824 44,180 4) cost of goods sold for April. (Job 115) 23,103 5) cost of goods sold for April. X (1+Profit %) Price of job sold 23103 125% 28878