Question

Information on Kwon Manufacturing’s activities for its first month of operations follows: Purchased $101,700 of raw materials on credit. Materials requisitions show the following materials used for the month. Job 201 $ 49,900 Job 202 25,300 Total direct materials 75,200 Indirect materials 10,320 Total materials used $ 85,520 Time tickets show the following labor used for the month. Job 201 $ 40,900 Job 202 14,300 Total direct labor 55,200 Indirect labor 25,900 Total labor used $ 81,100 Applied overhead to Job 201 and to Job 202 using a predetermined overhead rate is 80% of direct materials cost. Transferred Job 201 to Finished Goods Inventory. (1) Sold Job 201 for $168,860 on credit. (2) Record cost of goods sold for Job 201. Incurred the following actual other overhead costs for the month. Depreciation of factory equipment $ 33,700 Rent on factory building (payable) 670 Factory utilities (payable) 970 Expired factory insurance 4,700 Total other factory overhead costs $ 40,040 1. Prepare a job cost sheet for Job 201 and for Job 202 for the month. 2. Compute gross profit on the sale of Job 201.

Answer 1

1. The cost sheets for Job 201 and Job 202 are as follows:

                                     Job 201      Job 202       Total

Direct materials          $49,900      $25,300    $75,200

Direct labor                  40,900          14,300      55,200

Overhead applied       39,920         20,240       60,160

Total costs               $130,720      $59,840  $190,560

2. Gross profit for the sale of Job 201 = $38,140 ($168,860 - $130,720)

Data and Calculations:

Cost of raw materials purchased = $101,700

                                     Job 201      Job 202     Total

Direct materials          $49,900     $25,300   $75,200

Direct labor                  40,900         14,300     55,200

Overhead applied       39,920        20,240      60,160

Total costs               $130,720      $59,840  $190,560

Sales                        $168,860

Gross profit              $38,140

Thus, the cost of Job 201 sold is $130,720 with a gross profit of $38,140.

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