Sheds, Inc. designs and builds sheds and outbuildings for individual customers.

Question

Sheds, Inc. designs and builds sheds and outbuildings for individual customers.

The company uses a job cost system and treats each customer's order as a separate job.

At the beginning of January the company had the following raw material inventory:

$600

At the beginning of January the company had the following work-in-process inventories:

Job 21

$13,000

Job 25

$9,000

During January, the following activities took place:

1. Started jobs 26 and 27.

2. Purchased raw materials in January:

$12,000

Requisitioned (or used) the following raw materials to the specific jobs:

Job 21

$2,000

Job 25

$5,000

Job 26

$1,000

Job 27

$3,000

3. Incurred January manufacturing payroll:

Direct Labor

Job 21

$750

Job 25

$2,000

Job 26

$900

Job 27

$1,500

Indirect labor

$600

4. Incurred additional manufacturing overhead costs for January:

Production equipment rent

$2,000

Manufacturing supplies purchased and used

$800

Factory utilities

$500

5. Applied manufacturing overhead using a predetermined rate based on predicted annual overhead

and predicted annual direct material cost as follows:

Predicted Annual Overhead

$48,000

Predicted Annual Direct Material cost

$120,000

6. Completed jobs 25 and 27.

7. Customer for Job 27 picked up completed job and was billed the following:

Job 27

12,000

8. The company had the following period costs that they incurred:

Sales commissions

$2,000

Administrative salaries

$3,000

-Determine the Finished Goods for January and provide the number of the Jobs in Finished Goods at the end of January and determine the total cost of ending finished goods for January.

-Determine the Cost of Goods Sold for January and provide the number of the Jobs in Cost of Goods Sold for January and determine the total cost of goods sold for January.

-Determine the ending Work-In-Process Inventory at the end of January and provide the number of the Jobs still in Work-in-Process at the end of January and the determined total cost of ending work in process for January.

Sheds, Inc. designs and builds sheds and outbuildings for individual customers.

The company uses a job cost system and treats each customer's order as a separate job.

At the beginning of January the company had the following raw material inventory:

$600

At the beginning of January the company had the following work-in-process inventories:

Job 21

$13,000

Job 25

$9,000

During January, the following activities took place:

1. Started jobs 26 and 27.

2. Purchased raw materials in January:

$12,000

Requisitioned (or used) the following raw materials to the specific jobs:

Job 21

$2,000

Job 25

$5,000

Job 26

$1,000

Job 27

$3,000

3. Incurred January manufacturing payroll:

Direct Labor

Job 21

$750

Job 25

$2,000

Job 26

$900

Job 27

$1,500

Indirect labor

$600

4. Incurred additional manufacturing overhead costs for January:

Production equipment rent

$2,000

Manufacturing supplies purchased and used

$800

Factory utilities

$500

5. Applied manufacturing overhead using a predetermined rate based on predicted annual overhead

and predicted annual direct material cost as follows:

Predicted Annual Overhead

$48,000

Predicted Annual Direct Material cost

$120,000

6. Completed jobs 25 and 27.

7. Customer for Job 27 picked up completed job and was billed the following:

Job 27

12,000

8. The company had the following period costs that they incurred:

Sales commissions

$2,000

Administrative salaries

$3,000

Explanation / Answer

Job Sheet job 21 job 25 job26 job 27 total Beginning work in process 13,000 9,000 22,000 Cost added during Jan Direct materials 2,000 5,000 1,000 3,000 11,000 Direct labor 750 2,000 900 1,500 5150 overhead applied 800 2000 400 1200 4400 total cost added during Jan 3,550 9,000 2,300 5,700 20,550 total cost 16,550 18,000 2,300 5,700 42,550 overhead rate = estimated overhead/estimated direct material cost 48,000/120,000 0.4 completed jobs 25&27 = 23,700 (18000+5700) cost of goods sold (job 27) 5,700 WIP (job 21& job 26) 18,850 (16,550+2300) 1) Finished goods for january $23,700 number of jobs in finished at end of Janaury       job 25 that is one job total cost of ending finished goods for jan $18,000 2) Cost of goods sold for jan $5,700 number of jobs in cogs at end of Janaury       job 27 that is one job total cost of goods sold for Jan $5,700 3) Work in process inventory for jan $18,850 number of jobs still in WIP at end of Janaury       job 21&job 26 that is 2 jobs total cost of ending Work in process inventory 18,850

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