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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Determining manufacturing costs
Wagner Printing Inc. began printing operations on July I. Jobs 7-01 and 7-02 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 7-03 and 7-04 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $2,000 of indirect materials and $1,650 of indirect labor were used during the month. The cost sheets, in summary form, for the four jobs during the month are as follows:


Determine each of the following for July:
a. Direct and indirect materials used.
b.Direct and indirect labor used.
c. Factory overhead applied (a single overhead rate is used based on direct labor cost).
d.Cost of completed Jobs 7-01 and 7-02.
e.Assume that in addition to indirect materials and indirect labor, factory overhead of $1,500 was incurred during July. Determine the overapplied or underapplied overhead for March.

To determine

(a)

Concept Introduction:

Manufacturing cost is the cost which is incurred for producing a product. Manufacturing costs are direct material, direct labour, other overhead etc. The cost of product incurred from raw material to finished goods.

To calculate:

Calculate direct and indirect material cost for each job for the month of July.

Explanation

Direct material is the integral part of any production. This material are used for production process. The cost is directly identifiable and traceable. This cost is directly charged to the product.

Hence, the cost of direct material is calculated by taking a total cost of material used in all jobs.

Computation of total direct material cost is as follows:

  Total direct material=Direct material for job 7-01+

To determine

(b)

Concept Introduction:

Manufacturing cost is the cost which is incurred for producing a product. Manufacturing costs are direct material, direct labour, other overhead etc. The cost of product incurred from raw material to finished goods.

To calculate:

The direct and indirect labor cost for each job for the month of July.

To determine

(c)

Concept Introduction:

Manufacturing cost is the cost which is incurred for producing a product. Manufacturing costs are direct material, direct labour, other overhead etc. The cost of product incurred from raw material to finished goods.

To calculate:

The factory overhead applied based on direct labor cost for the month of June.

To determine

(d)

Concept Introduction:

Manufacturing cost is the cost which is incurred for producing a product. Manufacturing costs are direct material, direct labour, other overhead etc. The cost of product incurred from raw material to finished goods.

To calculate:

The total cost of jobs 701 and 702 for the month of June.

To determine

(e)

Concept Introduction:

Manufacturing cost is the cost which is incurred for producing a product. Manufacturing costs are direct material, direct labour, other overhead etc. The cost of product incurred from raw material to finished goods.

The over applied or under applied of overhead.

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