Dancer Corporation, which uses a job-costing system, had two jobs in process at

Question

Dancer Corporation, which uses a job-costing system, had two jobs in process at the start of 2014:

                        Job 59                          $ 95,000

                        Job 60                          $ 39,500

            WIP Inventory 1/1/14             $ 134,500

The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and machine activity for the year were anticipated to be $720,000 and 20,000 hours. · The company worked on three jobs during the first quarter and incurred the following costs:

Job No./ Direct Material/ Direct Labor/ Machine Hours
59,/ $18,000/,$45,000 ,/900

60/ ---- /$25,000 /600

61/ $37,000/ $35,000 /1,200
  Dancer completed Job 59 and Job 60 in the first quarter of 2014

a. [10 points] What is the firm's predetermined overhead rate?

b. [10 points] What is the cost of work-in-process inventory at the end of the quarter ?

c. [10 points] What is the cost of jobs completed during the first quarter ?

Explanation / Answer

Question - a

Companies predetermined overhead rate = Overhead / Machine hours = $720,000 / 20,000 hours. = 36 per hour

Question - b

Cost of WIP at the end of the quarter = cost of job - 61

= 37000 + 35000 + 1200 * 36 =  115200..................final answer

Question - c

Cost of jobs completed

WIP Beginning of the period 134500 Material ( 18000 + 0 ) 18000 Labor ( 45000 + 25000) 70000 Overhead ( 1500 * 36 ) 54000 Total cost of jobs completed 2,76,500

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