Introduction GoFood Custom Trailers, Inc. customizes trailers for food vendors.
ID: 2338131 • Letter: I
Question
Introduction
GoFood Custom Trailers, Inc. customizes trailers for food vendors. As of the beginning of January the company had three jobs already in progress (jobs A, B, and C). Below are the costs incurred to date on each of these jobs:
Jobs in Process
Costs incurred to date
Job A
$23,000
Job B
$12,000
Job C
$4,000
TOTAL Work in Process
$39,000
During the month of January the company started five more jobs (jobs D, E, F, G and H). Below is a summary of the direct materials used for all eight jobs and the direct labor hours incurred on each job during the month of January:
Jobs Worked in January
Direct Materials Used
Direct Labor hours incurred
Job A
$0
25
Job B
$4,500
80
Job C
$13,000
65
Job D
$8,500
110
Job E
$10,200
60
Job F
$18,000
35
Job G
$15,600
48
Job H
$11,700
55
TOTALS
$81,500
478
The company pays an average labor rate of $25.00 per hour. The company also applies manufacturing overhead to each job based on direct labor hours. The application rate is adjusted each month based on total expected overhead costs and total expected direct labor hours. The company estimates its total overhead costs in January to be $75,600 and expects to incur 500 total direct labor hours.
As of January 1 the company had a balance of in raw materials inventory of $10,000. During the month the company purchased $100,000 in raw materials. As stated above, the company started the month of January with a $39,000 balance in work-in-process inventory. The finished goods inventory as of January 1 was zero. During the month of January, the company incurred the following actual overhead costs:
Actual Overhead Costs
Office Supplies
$6,500
Indirect Materials
$9,300
Indirect Labor
$20,000
Factory Cleaning
$2,500
Depreciation
$16,000
Utilities
$5,700
Rent
$9,000
$69,000
During January, the company completed jobs A, B, C, E, and G. Further, jobs A, C, and E were sold during the month.
REQUIRED:
Determine the cumulative total manufacturing costs incurred to date for each of the eight jobs.
What were the total current manufacturing costs incurred in January for the company?
For the month of January, what is the cost of goods manufactured?
For the month of January, what is the cost of goods sold?
As of January 31, determine the ending balance of the raw materials inventory.
As of January 31, determine the ending balance of the work-in-process inventory.
As of January 31, determine the ending balance of the finished goods inventory.
Determine how much, if any, the manufacturing overhead account is over/under applied as of January 31.
Jobs in Process
Costs incurred to date
Job A
$23,000
Job B
$12,000
Job C
$4,000
TOTAL Work in Process
$39,000
Work-in-Process Inventory Costs Incurred as of January 1 $23,000 $12,000 $4,000 $39,000 Jobs in Progress at January1 Job A Job B Job C TOTAL Work in Process Costs incurred in January Direct Labor hours Direct Jobs Worked in January Materials Usedincurred Job A Job B Job C Job D Job E Job F Job G Job H TOTALS $0 $4,500 $13,000 $8,500 $10,200 $18,000 $15,600 $11,700 S81,500 25 80 65 110 60 35 48 478Explanation / Answer
Budgeted overhead
75600
Budgeted direct labor hour
500
Overhead rate per labor hour (75600/500)
$ 151.20
Beginning raw material inventory
10000
Add: material purchase
100000
Less: Material use for all eight job in January
-81500
Ending balance of the raw materials inventory
28500
Manufacture overhead applied
72273.6
Manufacture overhead incurred (less)
69000
Over applied of manufacture overhead
3273.6
Job Details
Job A
Job B
Job C
Job D
Job E
Job F
Job G
Job H
Total
Direct labour hour worked in January
25
80
65
110
60
35
48
55
478
Beginning work in progress
23000
12000
4000
39000
For January
Direct material
0
4500
13000
8500
10200
18000
15600
11700
81500
Direct labor (direct labour hour worked in January *25)
625
2000
1625
2750
1500
875
1200
1375
11950
Applied overhead (direct labour hour worked* 151.20)
3780
12096
9828
16632
9072
5292
7257.6
8316
72273.6
Total cost added in January
4405
18596
24453
27882
20772
24167
24057.6
21391
165723.6
Total cost (Jan 30)
27405
30596
28453
27882
20772
24167
24057.6
21391
204723.6
Status on January 30
Finished goods (sold)
Finished goods (unsold)
Finished goods (sold)
In progress
Finished goods (sold)
In progress
Finished goods (unsold)
In progress
Cost included in
Cost of goods sold
Finished goods
Cost of goods sold
Work in progress
Cost of goods sold
Work in progress
Finished goods
Work in progress
Answer
Cumulative total manufacturing costs incurred to date for each of the eight jobs
204723.60
Total current manufacturing costs incurred in January for the company
165723.60
Cost of goods manufactured for January (total cost of completed Jobs) (27405+30596+28453+20772+24057.6)
131283.60
Cost of goods sold for January (total cost of Jobs sold) (27405+28453+20772)
76630.00
Ending balance of the raw materials inventory
28500.00
Ending balance of the work-in-process inventory (Total cost of In progress Job) (27882+24167+21391)
73440.00
Ending balance of the finished goods inventory ( total cost of unsold finished goods inventory) (30596+24057.6)
54653.60
Over applied of manufacture overhead
3273.60
Budgeted overhead
75600
Budgeted direct labor hour
500
Overhead rate per labor hour (75600/500)
$ 151.20
Beginning raw material inventory
10000
Add: material purchase
100000
Less: Material use for all eight job in January
-81500
Ending balance of the raw materials inventory
28500
Manufacture overhead applied
72273.6
Manufacture overhead incurred (less)
69000
Over applied of manufacture overhead
3273.6
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