Casper Building Components Job No. Direct Material Direct Labor Applied Overhead

Question

Casper Building Components

Job No. Direct Material     Direct Labor      Applied Overhead    Total Cost
67         $17,703                    $6,920           $7,960                    $32,583
69           4,936                       7,240            8,328                      70,504
70           1,218                       2,000            2,300                       5,518
71        154,215                      28,500              ?                            ?
72          28,845                       2,200           2,532                       33,577

To explain the missing job number, you are informed that Job #68 had been completed in April. You are also told that Job #67 was the only job in process at the beginning of May. At that time, the job had been assigned $12,900 for direct material and $3,600 for direct labor. At the end of May, Job #71 had not been completed; all others had. You are to provide answers to the following questions:
a) What predetermined overhead rate does Casper Building Components use?
b) What was the total cost of beginning Work In Process Inventory?
c) What were total direct manufacturing costs incurred for May?
d) What was cost of goods manufactured for May?

Explanation / Answer

Job No.  DM           DL      Applied OH    Total Cost
67         $17,703    $6,920      $7,960        $32,583
69           54,936      7,240        8,328          70,504
70            1,218      2,000        2,300            5,518
71         154,215    28,500     32,7751    215,490
72           28,845     2,200        2,532          33,577
           $256,917  $46,860     $53,895     $357,672
        
128,500 x 1.15 = $32,775

a) What predetermined overhead rate does Casper Building Components use.
     2,300 / 2,000 = 1.15 times of Direct labor cost

b) What was the total cost of beginning Work In Process Inventory?
   Job #67    Direct materials               $12,900
                  Direct Labor                      $3,600
                  Overhead 3,600 x 1.15      $4,140
                 Beginning WIP Inventory    $20,640
                                                       ========
c) What were total direct manufacturing costs incurred for May?
    Total manufacturing cost ($256,917 + $46,860) $357,672
Less : Beginning WIP Inventory(12,900+3,600)        $16,500
Total Direct Manufacturing Cost for May                 $341,172
                                                                          =========
d) What was cost of goods manufactured for May?
    Total cost for all the jobs             $357,672
    Less : Beginning WIP Inventory      $20,640
    Total Cost for May                      $337,032
     Less : Ending WIP Inventory        $215,490
    Cost of goods manufactured         $121,542
                                                    =========
             

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