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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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Calculation of Work in Process and Cost of Goods Sold with Multiple Jobs

Ensign Landscape Design designs landscape plans and plants the material for clients. On April 1, there were three jobs in process, Jobs 39, 40, and 41. During April, two more jobs were started, Jobs 42 and 43. By April 30, Jobs 40, 41, and 43 were completed and sold. The following data were gathered:

Chapter 4, Problem 49E, Calculation of Work in Process and Cost of Goods Sold with Multiple Jobs Ensign Landscape Design

Overhead is applied at the rate of 110% of direct labor cost. Jobs are sold at cost plus 30%. Selling and administrative expenses for April totaled $4,575. (Round all amounts to the nearest dollar.)

Required:

  1. 1. Prepare job-order cost sheets for each job as of April 30.
  2. 2. Calculate the ending balance in Work in Process (as of April 30) and Cost of Goods Sold for April.
  3. 3. Construct an income statement for Ensign Landscape Design for the month of April.

1.

To determine

Make job-order cost sheet for each job for April.

Explanation

Job-order Cost Sheet:

A document which is maintained for every job and accumulates all the costs incurred to a specific job is known as a job-order cost sheet. It is referred for total direct materials cost, total direct labor cost, applied overhead, and total manufacturing cost.

Job-order cost sheet as of April 30:

 Job 39($)Job 40($)Job 41($)Job 42($)Job 43($)

Beginning balance,

April, 1

5403,4002,99000
Direct materials7005603753,5006,900
Direct labor costs5006004902,5003,000
Overhead applied5506605392,7503,300

Closing balance,

April 30

$2,290$5,220$4,394$8,750$13,200

Table (1)

Working Note:

1. Calculation of overhead applied:

Job 39:

Overheadapplied=Directlaborcost×Overheadrate=$500×110100=$550

Job 40:

Overheadapplied=Directlaborcost×Overheadrate=

2.

To determine

Compute ending balance in work in process and cost of goods sold for April.

3.

To determine

Prepare an income statement for Firm ELD for the month of April.

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