Chapter 15, Problem 15SP

SERIAL PROBLEM

Business Solutions P1 P2 P3

(This serial problem began in Chapter 1 and continues through most of the book. If previous chapter segments were not completed, the serial problem can begin at this point.)

SP 15 The computer workstation furniture manufacturing that Santana Rey started Rey started in January is progressing well. As of the end of June, Business Solutions’s job cost sheets show the following total costs accumulated on three furniture jobs.

Job 602 was started in production in May, and these costs were assigned to it in Ma: direct materials, $600; direct labor, $180; and overhead, $90. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company’s predetermined overhead rate did not change over these months.)

Required

1. What is the cost of the raw material used in June for each of the three jobs and in total?

Check (1) Total materials, $6,900

2. How much total direct labor cost is incurred in June?

3. What predetermined overhead rate is used in June?

(3) 50%

4. How much cost is transferred to Finished Goods Inventory in June?