Angry Birds Inc designs and builds retaining walls for indiv

Angry Birds, Inc. designs and builds retaining walls for individual customers. On August 1, 2 jobs were in process: Level 1 with a beginning balance of $12,000 and Level 2 with a beginning balance of $8,600. During August, Level 3 and Level 4 were started. Levels 1 and 2 were sold at cost plus 30% during August. All other Jobs remained in process at month end. The company applies manufacturing overhead at a rate of $11 per direct labor hour. Direct labor wages average $12 per hour. The following additional cost information is available for August: Level1 Leel Lel 3 Level 4 Direct Materials Direct Labor $1,200 $8,000 $2,100 $3,000 $1,800 $4,800 $360 $1,200 The sales staff is paid a 2% commission on all sales for the period. The company closes out the total overlunderapplied manufacturing overhead to Cost of Goods Sold at the end of each month. Calculate the following given actual MOH of $8,200 incurred during August. The amount of MOH applied to all jobs in process during August equals $L The adjusted COGS reported on the Income Statement for August equals S The gross profit reported on the Income Statement for August equals The ending work in process balance reported on the Balance Sheet for August equals S Round final answers to the nearest dollar.

Solution

Amount of MOH applied to all jobs in process: Level 1 Level 2 Level 3 Level 4 Direct labor a 1800 4800 360 1200 direct labor rate b 12 12 12 12 Direct Labor hours c=a/b 150 400 30 100 predetermined overhead rate d 11 11 11 11 Applied Manufacturing Overhead e=c*d 1650 4400 330 1100 Amount of MOH applied to all jobs in process=1650+4400+330+1100=7480 Adjusted COGS: Jobs sold Level 1 and 2 Cost of goods sold=Cost of Level 1 and Level 2 Level 1 Level 2 Beginning balance 12000 8600 Direct Materials Used 1200 8000 Direct labor 1800 4800 Applied Manufacturing Overhead 1650 4400 16650 25800 Total cost of goods sold=16650+25800=42450 Actual MOH=8200 Applied MOH=7480 Under-applied MOH=8200-7480=720 Under-applied MOH is adjusted to COGS Adjusted COGS=42450+720= 43170 Gross profit : Sales=Cost +30%=42450+30%=55185 Gross profit=Sales-Cost of goods sold=55185-42450=12735 Ending Work-in-process: Ending Work-in-process balance=Cost of incomplete jobs=Cost of Level 3 & 4. Level 3 Level 4 Direct Materials Used 2100 3000 Direct labor 360 1200 Applied Manufacturing Overhead 330 1100 2790 5300 Ending Work-in-process=$ 8090