Heritage Company uses a job-order costing system to assign costs to jobs. It had no work in process or finished goods invento on hand at the beginning of May. The table below provides data concerning the only three jobs worked on in May. Direct labor hours Direct materials Direct labor Job X 202 $ 4,890 $ 2,420 Job Y 82 $ 1,860 $ 1,050 Job Z 122 $ 3,620 $ 1,520 Jobs X and Y were completed in May; however, only 150 of the 200 units included in Job X were sold in May, whereas all 100 Job Y's units were sold in May. Job Z was not completed by the end of the month. Overhead costs are applied to jobs based on direct labor-hours, and the predetermined overhead rate is $45 per direct labor- The company's total applied overhead always equals its total actual overhead. Required: 1. Compute the amount of overhead cost that would have been applied to each job during May. 2. Compute the work in process inventory that would be reported in the company's May 31 balance sheet. 3. Compute the finished goods inventory that would be reported in the company's May 31 balance sheet. 4. Compute the cost of goods sold that would be reported in the company's income statement for May.
Heritage Company uses a job-order costing system to assign costs to jobs. It had no work in process or finished goods invento on hand at the beginning of May. The table below provides data concerning the only three jobs worked on in May. Direct labor hours Direct materials Direct labor Job X 202 $ 4,890 $ 2,420 Job Y 82 $ 1,860 $ 1,050 Job Z 122 $ 3,620 $ 1,520 Jobs X and Y were completed in May; however, only 150 of the 200 units included in Job X were sold in May, whereas all 100 Job Y's units were sold in May. Job Z was not completed by the end of the month. Overhead costs are applied to jobs based on direct labor-hours, and the predetermined overhead rate is $45 per direct labor- The company's total applied overhead always equals its total actual overhead. Required: 1. Compute the amount of overhead cost that would have been applied to each job during May. 2. Compute the work in process inventory that would be reported in the company's May 31 balance sheet. 3. Compute the finished goods inventory that would be reported in the company's May 31 balance sheet. 4. Compute the cost of goods sold that would be reported in the company's income statement for May.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Heritage Company uses a job-order costing system to assign costs to jobs. It had no work in process or finished goods invento
on hand at the beginning of May. The table below provides data concerning the only three jobs worked on in May.
Direct labor hours
Direct materials
Direct labor
Job X
202
$ 4,890
$ 2,420
Jobs X and Y were completed in May; however, only 150 of the 200 units included in Job X were sold in May, whereas all 100 o
Job Y's units were sold in May. Job Z was not completed by the end of the month.
Required 1
Job Y
82
$ 1,860
$1,050
Overhead costs are applied to jobs based on direct labor-hours, and the predetermined overhead rate is $45 per direct labor-h
The company's total applied overhead always equals its total actual overhead.
Required 2
Required:
1. Compute the amount of overhead cost that would have been applied to each job during May.
2. Compute the work in process inventory that would be reported in the company's May 31 balance sheet.
3. Compute the finished goods inventory that would be reported in the company's May 31 balance sheet.
4. Compute the cost of goods sold that would be reported in the company's income statement for May.
Complete this question by entering your answers in the tabs below.
Finished goods inventory
Job Z
122
Required 3
$ 3,620
$ 1,520
Required 4
Compute the finished goods inventory that would be reported in the company's May 31 balance sheet.
Job X
Job Y
Job Z
$
Total
0
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