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Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company’s production activities during May 2017 follows.

Purchased raw materials on credit, $220,000.

Materials requisitions record use of the following materials for the month.

132,500

Paid $15,750 cash to a computer consultant to reprogram factory equipment.

Time tickets record use of the following labor for the month. These wages were paid in cash.

Applied overhead to Jobs 136, 138, and 139.

Transferred Jobs 136, 138, and 139 to Finished Goods.

Sold Jobs 136 and 138 on credit at a total price of $545,000.

The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Work in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.

Job 136 $ 49,000 Job 137 33,500 Job 138 20,200 Job 139 22,800 Job 140 7,000 Total direct materials

132,500

Indirect materials 21,000 Total materials used $ 153,500

Explanation / Answer

Report of job costs :

Work in process inventory Direct material (33500+7000) 40500 Direct labour (10700+3200) 13900 Applied overhead 27800 Balance 82200 Finished goods inventory Direct material ( 22800 Direct labour 39600 Applied overhead 79200 Balance 141600 Cost of goods sold Direct material (49000+20200) 69200 Direct labour (12100+37900) 50000 Applied overhead 100000 Balance 219200

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