Problem 4 - Wardsman Cabinets produces custom kitchen cabinets for builders and

Question

Problem 4 - Wardsman Cabinets produces custom kitchen cabinets for builders and individuals. Wardsman applies overhead based on direct labor cost at a rate of $0.70. At the start of 2015, three jobs were in process:

Cost incurred as of January 1, 2015: $4,600

Job 87 $1,200

Job 88 1,500

Job 90   1,900

In addition, Job 89 was completed and awaiting shipment at January 1, 2015. Its cost was $2,300.

Costs added in January

               Direct Labor   Direct Materials

Job 87           $700                    $1,100

Job 88             300                      1,000

Job 90             500                         600

Job 91             800                         650

Job 92             400                      1,200

                  Total          $2,700                    $4,550

At the end of January, two jobs were in still in process, Job 90 and 91. All other jobs were completed, including Job 92 which was completed during January and awaiting shipment at January 31. All other jobs were shipped.

Set up the respective ledger accounts and subsidiary accounts for work in process. Track the costs in the respective accounts. determine ending balances, and determine the following in terms of job numbers and costs:

1.      Beginning Work in Process

2.      Ending Work in Process

3.      Beginning Finished Goods

4.      Ending Finished Goods

5.      Cost of Goods Sold

Explanation / Answer

Stock Ledger Account Amount $ (DEBIT) Amount $ (CREDIT) Job No/Particulars 87 88 89 90 91 92 Job No/Particulars 87 88 89 90 91 92 Begning Work In Process 1200 1500 1900 Cost of Finished Goods 3049 2821 2300 1628 Ending Work In Process 3035 1506 Begning Finished Goods 2300 Direct Labour 700 300 500 800 400 Direct Material 1100 1000 600 650 1200 Overhead 49 21 0 35 56 28 3035 1506 Total 3049 2821 2300 3035 1506 1628 3049 2821 2300 3035 1506 1628 Work In Process Account Amount $ (DEBIT) Amount $ (CREDIT) Job No/Particulars 87 88 89 90 91 92 Job No/Particulars 87 88 89 90 91 92 Stock Ledger Account 3035 1506 Stock Ledger Account 1200 1500 1900 Job No/Particulars 87 88 89 90 91 92 Begning Work In Process 1200 1500 1900 Ending Work In Process 3035 1506 Begning Finished Goods 2300 Ending Finished Goods 1628 Cost of Goods Sold 3049 2821

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