Question

79. The sens 1 OBJECTIVE 34 Exercise 5.12 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 Finished Goods Inventory 8,700 Work-in-process inventory is made up of three jobs with the following costs: Job 114 Job 115 Job 116 Direct materials $2,411 $2,640 $3,650 Direct labor 1,800 1,560 4,300 Applied overhead 1,170 1,014 2,795

Answer 1

WORKING

Predetermined overhead rate = Applied overhead to job 114 at beginning /Direct labor cost

                                   = 1170 / 1800

                                   = .65 or 65% of direct labor cost

**Can check for other Job 115 or 116 .

Job	114	115	116
Beginning work in process	5381    [2411+1800+1170]	5214    [2640+1560+1014]	10745   [3650+4300+2795]
Direct material	16500	12200	5000
Direct labor	150*12=1800	220*14=3080	80*18=1440
Overhead applied	1800*65%= 1170	3080*65%= 2002	1440*65%= 936
Total cost	24851	22496	18121

3)

	Ending Balance of work in process as of April 30
Job 114	24851
Job 116	18121
Total	42972

4)Cost of goods sold = cost of Job 115 = 22496

5)

Price = Cost (1+% of markup )

          = 22496 (1+ .25)

          = 22496 * 1.25

          = 28120