Question

Stone Cliff Company manufactures custom-order furniture.During 2013,actual manufacturing overhead totaled $720,000.Based on the 2013 results,and projected production for 2014,management prepared the 2014 budget and estimated that manufacturing overhead would total $800,000.The estimated number of direct labor hours for 2014 is 500,000,and the estimated amount of direct labor cost is $1,000,000.The company plans to use direct labor hours as the basis to allocate overhead to jobs.During May and June 2014,employees worked on the following four jobs:
Monthly data Job X43 Job X87 Job Z22 Job A33
May
Direct materials $86,000 $72,000 $44,000 $38,000
Direct labor cost $101,000 $91,000 $78,000 $52,000
Direct labor hours 5,050 4,550 3,900 2600
June
Direct materials $24,000 $41,000 $35,000 $24,000
Direct labor cost $28,000 $52,000 $62,000 $32,800
Direct labor hours 1,400 2,600 3,100 1,640

All jobs were started in May. Jobs X87 and A33 were completed and delivered to customers during June. What is the balance of the Work in Process Inventory account on June 30?

Answer 1

Answer:

$479,520

Explanation:

Calculation for the balance of the Work in Process Inventory account on June 30

First step is to calculate the Predetermine overhead rate

Predetermine overhead rate = 800,000/500,000

Predetermine overhead rate = 1.6 per labour hour

Second Step will be to calculate the Total cost for Job X43 and Job Z22

Job X43 Job Z22

Direct material 110,000 79,000

(Job X43 86,000+24,000=110,000)

(Job Z22 44,000+35,000=79,000)

Add Direct labour 129,000 140,000

(Job X43 101,000+28,000=129,000)

(Job Z22 78,000+62,000=140,000)

Add Manufacturing overhead applied

10,320 11,200

[Job X43 (5,050+1,400) *1.60= 10,320]

[Job Z22 (3,900+3,100)*1.6= 11,200]

Total cost 249,320 230,200

Last step is to calculate Work in process balance

Work in process balance = (249,320+230,200) Work in process balance=$ 479,520

Therefore the balance of the Work in Process Inventory account on June 30 will be $ 479,520