ACCOUNTING-General Corporation employs a job order cost system

Question
2 Computations using a job order system

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

Work in process $ 35,200

Finished goods 86,900

Cost of goods sold 128,700

Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103 ($14,800). During May, direct materials requisitioned from the storeroom amounted to $96,500, and direct labor incurred totaled $114,500. These figures are subdivided as follows:

Direct Materials

Direct Labor

Job No.

Amount

Job No.

Amount

101

$5,000

101

$7,800

115

19,500

103

20,800

116

36,200

115

42,000

Other

35,800

116

18,000

$96,500

Other

25,900

$114,500

Job no. 115 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 $21,000 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.

(11,700 + 31,200 + 63,000 + 27,000 + 38850) = $171,750

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

(19,500 + 42,000 + 63,000) = $124,500

c. Compute the cost of jobs completed during May.

(417,950 – 124,500) = $293,450

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

(114,500 * 150%) = $109,400

Calculations

Job

101

103

115

116

Other

Total

Opening

20400*

14800**

35200

DM

5000

19500

36200

35800

96500

DL

7800

20800

42000

18000

25900

114500

Overhead ***

11700

31200

63000

27000

38850

171750

Total

44900

66800

124500

81200

100550

417950

*, ** Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103 ($14,800).

*** General applies overhead daily at the rate of 150% of direct labor cost as labor summaries are

posted to job orders.