BBS Manufacturing Company manufactures one product that has several model styles. All materials are added at...
BBS Manufacturing Company manufactures one product that has several model styles. All materials are added at the beginning of production. Manufacturing overhead is applied as a percentage of direct labor cost. On January 1, 2019, one job, DE31, was in process, with the following accumulated costs: Materials $ 11,000 Direct labor 4,000 Manufacturing overhead 1,000 Total $ 16,000 The beginning finished goods inventory for BBS Manufacturing Company on January 1, 2019, was $30,000. The following additional data is given for the month of January: Total labor costs incurred $ 30,000 Total cost of completed Job DE31 21,000 Total materials costs incurred 23,000 Also, Job JA01 was begun and completed during the month. Its costs included materials of $10,000 and labor of $4,000. Job JA02 was begun during the month and was in process at the end of the month. During the month, sales were $90,000, and the gross profit rate was 40 percent. Required: For Jobs DE31, JA01, and JA02, calculate the cost of materials, labor, and overhead for the month of January to find the total cost of each job. Prepare a schedule of cost of goods sold for the month of January. Analyze: On January 1, 2019, BBS Manufacturing Company established a goal to hold raw materials costs at or below 48 percent of total job costs. Based on your computations, has the company attained this goal?
Homework Answers
| Jobs | Total | |||
| DE31 | JA01 | JA02 | ||
| Beginning balance, Jan. 1, 2019 | 16000 | 0 | 0 | 16000 |
| Costs incurred in January: | ||||
| Direct materials | 0 | 10000 | 13000 | 23000 |
| Direct labor | 4000 | 4000 | 22000 | 30000 |
| Manufacturing overhead | 1000 | 1000 | 5500 | 7500 |
| Total job cost $ | 21000 | 15000 | 40500 | 76500 |
Overhead rate = Manufacturing overhead/Direct labor cost = $1000/$4000 = 25%
| BBS Manufacturing Company | |
| Schedule of Cost of Goods Sold | |
| For the Month of January, 2019 | |
| Cost of goods manufactured* | 36000 |
| Add: Finished goods, January 1, 2019 | 30000 |
| Cost of goods available for sale | 66000 |
| Less: Finished goods, January 31, 2019 | 12000 |
| Cost of goods sold** | 54000 |
*Cost of goods manufactured:
| Job DE31 | 21000 |
| Job JA01 | 15000 |
| Total cost of goods manufactured $ | 36000 |
**Cost of goods sold = Sales - Gross profit = $90000 - (40% x $90000) = $90000 - $36000 = $54000
Analyze:
| Total direct materials cost for January | 23000 |
| Total job costs for January | 60500 |
| % of raw materials cost to total job costs | 38% |
Answer: Yes
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