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 $12,730 Work-in-Process Inventory 21,340 8,700 Finished Goods Inventory Work-in-process inventory is made up of three jobs with the following costs: Job 114 Job 115 Job 116 $2,411 $2,640 $3,650 Direct materials Direct labor Applied overhead 1,800 1,560 4,300 1,170 1,014 2,795 During April, Sangvikar experienced the transactions listed below. a. Materials purchased on account, $29,000. b. Materials requisitioned: Job 114, $16,500; Job 115, $12,200; and Job 116, $5,000. C. Job tickets were collected and summarized: Job 114, 150 hours at $12 per hour; Job 115, 220 hours at $14 per hour; and Job 116, 80 hours at $18 per hour. d. Overhead is applied on the basis of direct labor cost. e. Actual overhead was $4,415. f. Job 115 was completed and transferred to the finished goods warehouse. 9. 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. Ending Balance

Answer 1

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PARTICULARS RAW MATERIAL A/C TO ACCOUNTS PAYABLE (MATERIAL PURCHASED ON CREDIT) DR $ CR$ DR. 29000 290001 WIP A/C TO RAW MATERIAL A/C (MATERIAL ISSUED FOR PRODUCTION) DR. 33700 337001 WIP A/C TO DIRECT LABOR A/C (LABOR CHARGED BASED ON JOB TICKET) DR. 63201 6320 DR. 4108 WIP A/C TO FACTORY OVERHEADS A/C (OVERHEADS APPLIED BASED ON DIRECT LABOR COST) 4108 DR. 4415 FACTORY OVERHEADS A/C TO CASH (ACTUAL OVERHEADS INCURRED) 4415 COST OF SALE A/C TO FINISHED GOODS A/C (JOB SHIPPED) DR. 22496 22496 ACCOUNTS RECEIVABLE A/C TO SALE (CUSTOMER CHARGED FOR THE JOB) DR. 28120 28120

DIRECT MATERIALS DIRECT LABOR APPLIED OVERHEADS TOTAL JOB 114 JOB 115|JOB 116 TOTAL 24111 2640 3650 8701 1800 1560 4300 7660 1170 1014 27951 4979 5381) 5214 10745 21340 OVERHEADS RATE 0.65 0.65 0.65 MATERIAL ISSUED DIRECT LABOR OVERHEADS APPLIED TOTAL COST 16500 1800 1170 24851 12200 3080 2002 22496 5000 33700 1440|6320 9361 4108 18121 65468 TRANSFERRED TO FINISHED GOODS BALANCE 0 24851 -22496 0 0-22496 18121 42972

RAW MATERIAL A/C PARTICULARS DR S PARTICULARS TO OPENING BALANCE 12730 BY WIP A/C TO ACCOUNTS PAYABLE 29000 CR $ 33700 BY BALANCE C/F 41730 8030 41730 WIP A/C PARTICULARS DR$ PARTICULARS CR$ TO OPENING BALANCE 21340 TO RAW MATERIAL 33700 TO FINISHED GOODS A/C22496 TO DIRECT LABOR 6320 TO FACTORY OVERHEADS 4108 BY BALANCE C/F 65468 42972 CR $ FINISHED GOODS A/C PARTICULARS DR $ PARTICULARS TO OPENING BALANCE 8700 TO WIP A/C 22496 BY COST OF SALE A/C 22496 BY BALANCE C/F 31196 8700 31196