XYZ Company began operations during 2016 and employs a job-order costing system
ID: 2414875 • Letter: X
Question
XYZ Company began operations during 2016 and employs a job-order costing system that applies overhead to jobs using direct labor hours as the activity level. For 2016, XYZ Company had total estimated overhead of $229,500 and total estimated direct labor hours of 25,500. Listed below is a summary of events and transactions that occurred during 2016:
a. XYZ Company purchased 80,000 pounds of direct materials at $4.20 per pound.
b. XYZ began work on three jobs. Direct materials used for each job were:
Job A-1 .................. 17,000 pounds
Job A-2 .................. 25,000 pounds
Job A-3 .................. 30,000 pounds
c. Direct labor hours used for each job were:
Job A-1 .................. 9,800 hours
Job A-2 .................. 7,800 hours
Job A-3 .................. 8,400 hours
Direct labor workers are paid $12 per hour.
d. The following additional costs were incurred:
Manufacturing Facility : Administrative Facility:
Rent ……………... $ 42,000 $ 15,000
Depreciation ……. 55,000 12,000
Utilities …………. 51,000 10,000
Salaries ………..… 92,000*** 65,000
Totals …………... $ 240,000 $ 102,000
*** This $92,000 is all indirect labor. See letter (c) for direct labor for the manufacturing facility.
e. Jobs A-1 and A-2 were completed during 2016. Job A-2 was sold to the customer for $420,000.
Calculate the total amount of inventory shown on XYZ Company's December 31, 2016 balance sheet. Do not use decimals in your answer.
Explanation / Answer
Solution.
Predetermined overhead rate = $229,500 / 25,500 = $9 per direct labor hour.
Inventory shown on XYZ Company's December 31, 2016 balance sheet.
= 873,600.00 - 268,800.00 = $604,800
Particular Job A-1 Job A-2 Job A-3 Direct material 71,400.00 105,000.00 126,000.00 Direct Labor 117,600.00 93,600.00 100,800.00 Applied Overhead 88,200.00 70,200.00 100,800.00 Total cost 277,200.00 268,800.00 327,600.00 873,600.00Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.