ACC 206 Week 3 Problem 2 Computations using a job order system (Updated October 2013).

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Computations using a job order system

Spencer Corporation employs a job order cost system. On May 1 the following balances were extracted from the general ledger;

Work in process $ 36,200

Finished goods 86,900

Cost of goods sold 130,700

Work in Process consisted of two jobs, no. 101 ($22,400) and no. 103 ($13,800). During May, direct materials requisitioned from the storeroom amounted to $96,500, and direct labor incurred totaled $116,500. These figures are subdivided as follows:

Direct Materials                                   Direct Labor

Job No.       Amount                           Job No.           Amount

101                  $6,000                           101                  $7,800

117                    18,500                         103                    20,800

116                    34,200                          115                   44,000     

    Other           36,800                           116                    18,000

                       $95,500                          Other                  25,900

                                                                                            $116,500

Job no. 117 was the only job in process at the end of the month. Job no. 101 and three “other” jobs were sold during May at a profit of 20% of cost. The “other” jobs contained material and labor charges of $23,000 and $17,400, respectively.

General applies overhead daily at the rate of 150% of direct labor cost as labor summaries are posted to job orders. The firm’s fiscal year ends on May 31.

Instructions:

a. Compute the total overhead applied to production during May.

b. Compute the cost of the ending work in process inventory.

c. Compute the cost of jobs completed during May.

d. Compute the cost of goods sold for the year ended May 31.