27th Edition
WARREN + 5 others
ISBN: 9781337272094




27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Analyzing manufacturing cost accounts

Fire Rock Company manufactures Designer paddle boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for June:


In addition, the following information is available:

a . Materials and direct labor were applied to the following jobs in June:


b. factory overhead is applied to each job at a rate of 140% of direct labor cost

c. The June 1 Work in Process balance consisted of two job as follows:

Job No. Style Work In Process, June 1
201 T100 $16,500
202 T200 44,000
Total   $60,500

d. Customer jobs completed and units sold in June were as follows:



1. Determine the missing amounts associated with each letter. Provide supporting calculations by completing a table with the following headings:

2. Determine the June 50 balances for each of the inventory accounts and factor overhead.


To determine

Job order costing

Job order cost system provides a separate record of each particular quantity of product that passes through the factory. Each quantity that is manufactured in the business is known as job. Job order costing is used when the products produced are significantly different from each other.

To determine: the missing amounts associated with each letter.


The cost accounts are calculated as under:

  Missing Terms Amount ($)
(a) Material requisition, Balance as on June 30 (1) 395,500
(b) Work in process, Balance as on June 01Figure (1) 60,500
(c) Direct material cost, Balance as on June 30Figure (1) 351,500
(d) Direct labor cost, Balance as on June 30Figure (1) 264,450
(e) Factory overhead applied, Balance as on June 30Figure (1) 370,230
(f) Completed Jobs, Balance as on June 30(2) 903,620
(g) Cost of goods soldFigure (1) 751,870
(h) Indirect labor, Balance as on June 30(3) 65,550

Table (1)

Working note:

The supporting calculations are prepared as follows:

Figure (1)

The material requisition is calculated as follows:

Material requisition = Direct material cost + Indirect material cost used= $351,500 + $44,000$395


To determine
the ending balances for each inventory accounts and factory overhead.

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