The Falcon Company does not mainein beckup beginning balances on June 1 ere know

Question

The Falcon Company does not mainein beckup beginning balances on June 1 ere known documents for Rs computer files. In June, some of the curent data were lost, and you have been asked to help reconstruct the data. The following S13,800 Drect Manenis inveory Work-n-Process Irvereory Frished Goods inventor Manufscturing Overhesd Contol ccounts Paysble 4900 34.500 7800 The prodotion supe tende n's job cost sheets r deteed thes moterials of S4,400 were rel decin the June 30 W rkn Process In entory Also, 4 chrea labor hours had been paid at S700 per hour The Accounts Payable account is only for direct material purchases The cleck remembers clealy thet the balance in the Accounts Payable on June 30 was $9 800 An analyss of canceled checks ndicated payments of $58 000 were mide to suppljens during Jude Peyroll records ndice that 7000 direct labor-hourd r e ws vorfet that there were no variorions in pay rees among employees during June 1021000 O s3.0 59200 O 54780 O s3080

Explanation / Answer

WIP Balance = Materials + Labor + Overhead

Materials in Ending WIP = $4400

Labor in Ending WIP = 480 HOURS * $7.00 = $3360

Manufacturing Overhead per hour = Estimated Overhead Costs / Estimated Labor Hours

Manufacturing Overhead per hour = 234000 / 78000

Manufacturing Overhead per hour = $3

Manufacturing Overhead in Ending WIP = 480 HOURS * $3

Manufacturing Overhead in Ending WIP = $1440

Balance in Ending WIP = Materials in Ending WIP + Labor in Ending WIP + Manufacturing Overhead in Ending WIP

Balance in Ending WIP = $4400 + $3360 + $1440

Balance in Ending WIP = $9200

Therefore, the correct answer is option (b) i.e. $9200

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