Exercise 2-3 Analysis of cost flows LO C2 As of the end of June, the job cost sh

Question

Exercise 2-3 Analysis of cost flows LO C2 As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs. Direct materials Direct labor Overhead applied Job 102 Job 103 Job 104 $23,000 $71,000 $46,800 19,00 29,780 41,000 9,500 14,850 20,500 Job 102 was started in production in May and the following costs were assigned to it in May: direct materials, $8,000 direct labor, $2,900; and overhead, $1,450. Jobs 103 and 104 were started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 were finished in June, and Job 104 is expected to be finished in July. No raw materials were used indirectly in June. Using this information, answer the following questions. (Assume this company's predetermined overhead rate did not change across these months.) 1&2. Complete the table below to calculate the cost of the raw materials requisitioned and direct labor cost incurred during June for each of the three jobs? 3. Using the accumulated costs of the jobs, what predetermined overhead rate is used? 4. How much total cost is transferred to finished goods during June?

Explanation / Answer

Direct Material Job May June Total 102 $8,000.00 23000-8000=15000 $23,000.00 103 $71,000.00 $71,000.00 104 $46,000.00 $46,000.00 Total 8000 $132,000.00 $148,000.00 Direct labour Job May June Total 102 $2,900.00 19000-2900=16100 19000 103 $29,700.00 29700 104 $41,000.00 41000 Total 2900 $86,800.00 89700 Overhead Rate Numerator Denominator $9,500.00 / $19,000.00 = overhead Rate $9,500.00 $19,000.00 = 50% Job Direct materials Direct labor Applied overhead Total cost Cost transferred to Finished goods 102 23000 19000 9500 51500 51500 103 71000 29700 14850 115550 115550 104 46000 41000 20500 107500 Total 148000 89700 44850 274550 167050

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