Exercise 15-4 Analysis of cost flows L.O. C2, P1, P2, P3 As of the end of June,

Question

Exercise 15-4 Analysis of cost flows L.O. C2, P1, P2, P3

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.

Job 102 was started in production in May and the following costs were assigned to it in May: direct materials, $8,000; direct labor, $3,800; and overhead, $1,710. Jobs 103 and 104 are started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 are finished in June, and Job 104 is expected to be finished in July. No raw materials are used indirectly in June. Using this information, answer the following questions. (Assume this company%u2019s predetermined overhead rate did not change across these months).

What is the cost of the raw materials requisitioned in June for each of the three jobs? (Omit the "$" sign in your response.)

How much direct labor cost is incurred during June for each of the three jobs? (Omit the "$" sign in your response.)

How much total cost is transferred to finished goods during June? (Omit the "$" sign in your response.)

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.

Explanation / Answer

1.

What is the cost of the raw materials requisitioned in June for each of the three jobs? (Omit the "$" sign in your response.)

Job 102 39000

Less Prior cost (8000) 31000

Job 103 53000

Job 104 52000

Total Mat used (Requisitioned) 136000

2.

How much direct labor cost is incurred during June for each of the three jobs? (Omit the "$" sign in your response.)

DL cost incurred in month = Total DL cost for 3 jobs - DL cost assigned to Job 102 in May

Job 102 16000

Less Prior cost (3800) 12200

Job 103 28400

Job 104 43000

Total Direct Labour 83600

3. What predetermined overhead rate is used during June?

Ptedetermined OH rate = OH allocated to jobs/DL cost allocated to job.

Job 102: OH 7200

DL 16000

SO OH rate = 7200/16000 = 45.00%

Same rate will be applied for all jobs during month

4.

How much total cost is transferred to finished goods during June?

Cost Txferd to Finished goods is only for Jobs completed ie Job 102 & 103.

Job 102 : DM + DL + OH = 39000+16000+7200 = 62200

Job 103: 53000+ 28400+12780 =94180

SO Total cost = 62200+94180 = 156380

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