Question

Cost of a Manufactured Product- Job Costing System Robert Perez is a contractor specializing in custom-built Jacuzzis. Perez uses the Job Order Cost system. As of May 1, 2018, Perez has incurred the following costs for each of the jobs listed below HERMAN ALTON STINER $ 900 DM s 2,000 DMS 2500 DI. 800 DL 1,200 DL 2,000 560 FOH 840 FOH 1,400 FOH TOTAL: 2,260 TOTAL: $ 4,040 TOTAL:$ 5,900 During May, Perez incurs the following costs below. Perez begins one job during the month of May (Smith) and completes the other three during the course of the month (Stiner, Alton, and Herman). Factory Overhcad is charged (allocated or applied) to jobs on the basis of $.70 per dollar of direct labor hours. TIME FOI MATERIALS REQUISITIONSTICKETS (ALLOCATED) 500.00 400.00 STINER S ALTON 600.00 $ 1,000.00 2,300.00 $-1,300.00 1,900.00 2,300.00 HERMAN SMITH $ Determine the total cost of cach of the completed jobs in the space below ALTON STINER HERMAN DM DM DM DL DL DL FOH FOT FOH TOTAL TOTAL TOTAL: $ V. A What is the total amount left in the Work in Process account at the end of May? lint: use the job cost sheet for open job(s)) SMITH DM DI. FOH TOTAL Determine the amount of gross profit for each of the completed jobs, assuming they were sold for $13,000 each to the customer Actual FOIH costs are itemized below. Compare the amount of applied/allocated FOH for this period to the actual costs below and evaluate whether FOH is over or under-applied. Consider the impact of disposal of the under/overapplied amount orn total Gross Profit (and Net Income) for Perez Company for the month of May. Indirect Materials Indirect Labor Other lioH 1,500.00$ 2,00000 S 1,400.00 FOH is applied by $ After disposal of the over/underapplied FOH, what is the company's gross profit? V. A

Answer 1

Determination of total cost of each of the completed Job
	STINER			ALTON			HERMAN
	Beginning	Cost added	Total Cost	Beginning	Cost added	Total Cost	Beginning	Cost added	Total Cost
DM	$2,500.00	$500.00	$3,000.00	$2,000.00	$600.00	$2,600.00	$900.00	$2,300.00	$3,200.00
DL	$2,000.00	$400.00	$2,400.00	$1,200.00	$1,000.00	$2,200.00	$800.00	$1,300.00	$2,100.00
FOH	$1,400.00	$280.00	$1,680.00	$840.00	$700.00	$1,540.00	$560.00	$910.00	$1,470.00
Total Cost of Completed Job			$7,080.00			$6,340.00			$6,770.00
Total amount left in work in process at the end of May
	SMITH
	Beginning	Cost added	Total Cost
DM	$0.00	$1,900.00	$1,900.00
DL	$0.00	$2,300.00	$2,300.00
FOH	$0.00	$1,610.00	$1,610.00
Cost of work in process			$5,810.00
Determination of gross profit of each of completed Job
	STINER	ALTON	HERMAN
Sales	$13,000.00	$13,000.00	$13,000.00
Less : Cost	$7,080.00	$6,340.00	$6,770.00
Gross Profit	$5,920.00	$6,660.00	$6,230.00
Computation of over or under applied Factory Overheads
Applied Factory overheads for the period
- STINER	$280.00
- ALTON	$700.00
- HERMAN	$910.00
- SMITH	$1,610.00
Total Applied FOH for the period	$3,500.00
Less : Actual Factory Overhead	$4,900.00
Under applied FOH	$1,400.00
FOH is under applied by $1,400.
Company's gross profit after disposal of underapplied FOH
Tota; Gross Profit	$18,810.00
Less : Under applied FOH	$1,400.00
Gross profit after disposal of underapplied FOH	$17,410.00