Question

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor. The job was not finished by the end of the month, but needed an additional $3,000 of direct materials in October and additional direct labor of $6,500 to finish the job. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October

Answer 1

The amount of job costs added to Work in Process Inventory during October is $37,000

Explanation:

Job A3B was ordered by a customer on September 25.

The company applies overhead at a rate of 200% of the direct labor cost incurred.

Cost of September:

$2,500 of Direct Materials(DM)

$4,000 of Direct Labor(DL)

$4,000 manufactured overhead(OH)

Total job cost = DM + DL + (OH)

Total Job Cost =$2500+$4000+($4000*200%)

Total Job Cost=$2500+$4000+$8000

Total Job Cost=14500 (Cost for September)

Cost of October:

$3,000 of direct materials  

$6,500 of direct labor

$6,500  manufactured overhead

Total job cost = DM + DL + (OH)

Total Job Cost =$3000+$6500+($6500*200%)

Total Job Cost=$3000+$6500+$13000

Total Job Cost=22500 (Cost for October)

Total cost of Job A3B= September $14,500+ October $22,500 = $37,000

Work in process contains the sum of the costs on job cost sheets for jobs that are not yet complete.