You are the Accountant for a Custom Furniture company. The company uses a job order costing system and applies overhead on the basis of direct labor hours. The January 1, 2024 raw materials inventory balance was $19,000. Actual overhead for January was $106,500 and Direct Labor Hours for January totaled 2,975. The January 31, 2024 raw materials inventory balance was $27,000. During January 2024, Jobs No. 21 & 22 were completed. A single Job, No. 22, was sold for $110,000 during January 2024. January 31, 2024 costing information for jobs 20, 21, 22 and 23 are below. Job No. Direct Materials Direct Labor Direct Labor Hours 20 $ 7,500 $ 1,200 21 $ 4,000 $ 825 22 $ 7,000 $ 875 23 $ 3,000 $ 200 18,600 12,788 13,563 3,100 The predetermined overhead rate for 2024 is based on the company's estimated total manufacturing overhead during all of 2024 which is $1,265,125 and the estimated total direct labor hours of 34,900. The owner of the company does not have an accounting background and doesn't understand how the balances of the inventory accounts are calculated nor how gross profit is calculated. The owner asked you to prepare a single spreadsheet providing the inventory balances and gross profit for January 2024. Your Excel Spreadsheet must include formulas, formatted cells and at least once text box. Tasks: 1. Correctly calculate predetermined overhead rate to be used in January 2024. 2. Correctly calculate the balances of the inventory accounts at January 31, 2024 indicating which jobs are included in the balance as applicable. 3. Correctly calculate gross profit for January 2024 indicating which jobs are included as applicable.
You are the Accountant for a Custom Furniture company. The company uses a job order costing system and applies overhead on the basis of direct labor hours. The January 1, 2024 raw materials inventory balance was $19,000. Actual overhead for January was $106,500 and Direct Labor Hours for January totaled 2,975. The January 31, 2024 raw materials inventory balance was $27,000. During January 2024, Jobs No. 21 & 22 were completed. A single Job, No. 22, was sold for $110,000 during January 2024. January 31, 2024 costing information for jobs 20, 21, 22 and 23 are below. Job No. Direct Materials Direct Labor Direct Labor Hours 20 $ 7,500 $ 1,200 21 $ 4,000 $ 825 22 $ 7,000 $ 875 23 $ 3,000 $ 200 18,600 12,788 13,563 3,100 The predetermined overhead rate for 2024 is based on the company's estimated total manufacturing overhead during all of 2024 which is $1,265,125 and the estimated total direct labor hours of 34,900. The owner of the company does not have an accounting background and doesn't understand how the balances of the inventory accounts are calculated nor how gross profit is calculated. The owner asked you to prepare a single spreadsheet providing the inventory balances and gross profit for January 2024. Your Excel Spreadsheet must include formulas, formatted cells and at least once text box. Tasks: 1. Correctly calculate predetermined overhead rate to be used in January 2024. 2. Correctly calculate the balances of the inventory accounts at January 31, 2024 indicating which jobs are included in the balance as applicable. 3. Correctly calculate gross profit for January 2024 indicating which jobs are included as applicable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Transcribed Image Text:You are the Accountant for a Custom Furniture company. The company uses a job order costing system
and applies overhead on the basis of direct labor hours. The January 1, 2024 raw materials inventory
balance was $19,000. Actual overhead for January was $106,500 and Direct Labor Hours for January
totaled 2,975. The January 31, 2024 raw materials inventory balance was $27,000. During January
2024, Jobs No. 21 & 22 were completed. A single Job, No. 22, was sold for $110,000 during January
2024. January 31, 2024 costing information for jobs 20, 21, 22 and 23 are below.
Job No. Direct Materials Direct Labor Direct Labor Hours
20
$
7,500 $
1,200
21
$
4,000 $
825
22
$
7,000 $
875
23 $
3,000 $
200
18,600
12,788
13,563
3,100
The predetermined overhead rate for 2024 is based on the company's estimated total manufacturing
overhead during all of 2024 which is $1,265,125 and the estimated total direct labor hours of 34,900.
The owner of the company does not have an accounting background and doesn't understand how the
balances of the inventory accounts are calculated nor how gross profit is calculated. The owner asked
you to prepare a single spreadsheet providing the inventory balances and gross profit for January 2024.
Your Excel Spreadsheet must include formulas, formatted cells and at least once text box.
Tasks:
1. Correctly calculate predetermined overhead rate to be used in January 2024.
2.
Correctly calculate the balances of the inventory accounts at January 31, 2024 indicating which
jobs are included in the balance as applicable.
3. Correctly calculate gross profit for January 2024 indicating which jobs are included as applicable.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education