CACC406 Spring Summer 201 nsert Page Layout Formulas Data Re

CACC406 Spring Summer 201 nsert Page Layout Formulas Data Review View Cut Arial Copy E Wrap Text ?Merge & Center . . eFormat B 1 u.?.alal.An?{?. ?? ABC Company, a job order costing company worked on three jobs, Job 73, Job 74 and Job 75 in August Data are as follows Job 73 $ 6,760 Job 74 Direct materials Direct labor Machine hours 5,960 S S 9,600 S 9,840 8,400 $ 12,920 18,400 Overhead is applied to jobs based on Machine hours at the rate of s 16.00 On August 1, the balance of Finished Goods was as folows Job 72 Balance, August 1 By August 31, Job 73 and Job 75 were completed. Job 70 and Job 73 were so?d During August, the Sollowing expenses were incurred S 15,200 24,000 Variable marketing expenses Fiked marketing expenses Adminis tratve expenses 10% of sales revenue 3,840 The company prices its job at cost plus 30% (sales revenue). equired: Compute the balance in Work-in-Process as of August 31 a) (2 Marks) b) Compule the balance in Finished Goods as of August 31 03 Marks) month of May c) Compule the sales revenue for the month of August PMarks 01 MacBook esc ?? F2 oa FA F3 F5 F6

Solution

a) Balance in work in process represents the jobs which are not completed. There were 3 Jobs:Job 73,74 and 75. During august,Job 73 and 75 were completed.It means that Job 74 is not complete. Hence,Balance in work-in-process=Cost of Job 74 Cost of Job 74: Direct materials 9840 Direct labor 8400 Overhead=Machine hours*Predetermined ocerhead rate (280*16) 4480 Cost of Job 74 22720 Work in process as of Aug 31=$ 22720 b) Balance in finished goods represents the cost of Jobs which are completed but not sold There were 2 jobs which were completed at the beginning of August-Job 70 & 72. During August,Job 73 and 75 were completed During August,Job 70 and 73 were sold Now,the jobs which are completed but not sold are Job 72 and 75. Hence,Balance in finished goods=cost of Job 72 and 75. Job 72 Job 75 Balance,Aug 1. 24000 0 Direct materials 0 12920 Direct labor 0 18400 Overhead=Machine hours*Predetermined ocerhead rate 0 12800 (800*16) Total cost 24000 44120 68120 Finished goods as of Aug 31=$ 68120 c) During August,Job 70 and 73 were sold Sales revenue=(Cost of Job 70 & 73)+30% Job 70 Job 73 Balance,Aug 1. 15200 6760 Direct materials 0 5960 Direct labor 0 9600 Overhead=Machine hours*Predetermined ocerhead rate 0 5120 (320*16) Total cost 15200 27440 42640 Sales revenue=42640+30%=$ 55432 d) Operating income for the month of August: $ $ Sales revenue 55432 Less: cost of goods sold 42640 Gross profit 12792 Less:Selling and administrative expenses Variable marketing expenses (55432*10%) 5543 Fixed marketing expenses 1600 Administrative expense 3840 10983 Net operating income 1809