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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Prepare Job-Order Cost Sheets, Predetermined Overhead Rate, Ending Balance of WIP, Finished Goods, and COGS

At the beginning of March, Mendez Company had two jobs in process, Job 86 and Job 87, with the following accumulated cost information:

Chapter 4, Problem 33BEB, Prepare Job-Order Cost Sheets, Predetermined Overhead Rate, Ending Balance of WIP, Finished Goods, , example  1

During March, two more jobs (88 and 89) were started. The following direct materials and direct labor costs were added to the four jobs during the month of March:

Chapter 4, Problem 33BEB, Prepare Job-Order Cost Sheets, Predetermined Overhead Rate, Ending Balance of WIP, Finished Goods, , example  2

At the end of March, Jobs 86, 87, and 89 were completed. Only Job 87 was sold. On March 1, the balance in Finished Goods was zero.

Required:

  1. 1. Calculate the overhead rate based on direct labor cost. (Note: Round to three decimal places.)
  2. 2. Prepare a brief job-order cost sheet for the four jobs. Show the balance as of March 1 as well as direct materials and direct labor added in March. Apply overhead to the four jobs for the month of March, and show the ending balances.
  3. 3. Calculate the ending balances of Work in Process and Finished Goods as of March 31.
  4. 4. Calculate the Cost of Goods Sold for March.

1.

To determine

Compute the overhead rate based on direct labor cost.

Explanation

Overhead Rate:

The amount which is calculated at the beginning of the accounting year for a related activity by dividing the total estimated annual overhead by estimated annual activity level is known as the overhead rate.

Use the following formula to calculate overhead rate by Job 44:

Overheadrate=AppliedoverheadDirect

2.

To determine

Make job-order cost sheetof four jobsshowing opening balance, direct materials, direct labor, applied overhead, andending balances.

3.

To determine

Computethe balance in work in process and finished goods as onMarch31.

4.

To determine

Compute the amount of cost of goods sold (COGS) inMarch.

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