At the beginning of June, Rhone Company had two jobs in process, Job 44 and Job

Question

At the beginning of June, Rhone Company had two jobs in process, Job 44 and Job 45, with the following accumulated cost information:

During June, two more jobs (46 and 47) were started. The following direct materials and direct labor costs were added to the four jobs during the month of June:

At the end of June, Jobs 44, 45, and 47 were completed. Only Job 45 was sold. On June 1, the balance in Finished Goods was zero.

Job 44 Job 45 Direct materials $5,250 $1,500 Direct labor 1,200 2,500 Applied overhead 780 1,625 Balance, June 1 $7,230 $5,625

Explanation / Answer

1 Calculate the overhead rate based on direct labor cost. Round to three decimal places. Since the predetermined overhead rate is not given, it must be calculated from BWIP amounts using either Job 44 or Job 45. Using Job 44, Predetermined overhead rate = (780 / 1200) X 100 = 65% 0.65 Using Job 45, Predetermined overhead rate = (1625 / 2500) X 100 = 65% Therefore overhead rate based on the labor cost is 65% 2 Job 44 Job 45 Job 46 Job 47 Beginning Balance $7,230 $5,625                 -                   -   Direct Material $2,200 $7,150 $1,850 $1,700 Direct Labor $900 $6,380 $960 $540 Applied Overhead $585 $4,147 $624 $351 Total, June 30 $10,915 $23,302 $3,434 $2,591 3 By the end of June, Jobs 44, 45, and 47 have been transferred out of Work in Process. Thus, the ending balance in Work in Process consists of Job 46. Work In process - June 30 $3,434 While three jobs (44, 45, and 47) were transferred out of Work in Process and into Finished Goods during June, only two jobs remain (Jobs 44 and 47). Finished Goods Job 44 $10,915 Job 47 $2,591 Total $13,506 4 One job, Job 45, was sold during June Cost of Goods Sold $23,302

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