Question

During the month, the jobs used direct labor as shown below. Jobs 1 and 3 are not finished by the end of march, and job 2 is finished but not sold by the end of march.
1. Determine the amounts of direct materials, direct labor, and factory overhead applied that would be reported on job cost sheets for each of the three jobs for March.
2. Determine the total dollar amount of Work in Process Inventory at the end of March.
3. Determine the total dollar amount of Finished Goods Inventory at the end of March. Assume the company has no beginning Work in Process or Finished Goods inventories.

There is a 40% overhead rate for the direct materials used

Job 1 Job 2 Job 3
Direct materials used 5,000 7,000 1,500
Direct labor used 9,000 4,000 3,000

Answer 1

Explanation:

The computations are shown below:

1. Particulars                     Job 1                    Job 2                       Job 3

Direct Material                 $5,000                $7,000                    $1,500

Direct labor                     $9,000                 $4,000                    $3,000

Factory overhead            $2,000               $2,800                     $600

(40% of direct material)

Total cost                         $16,000             $13,800                   $5,100

2. The computation of the ending work in process inventory is

= Total cost of Job 1 + Total cost of Job 2

= $16,000 + $5,100

= $21,100

As these costs are not completed yet. Hence, it is to be considered as a work in process

3. The total amount of ending finished goods inventory is $13,800 as job 2 is finished