The computer workstation furniture manufacturing that Santana Rey started is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs. Job 602 $ 1,400 Direct materials Direct labor Overhead applied Job 603 $ 3,600 1,480 740 Job 604 $ 2,600 2,300 1,150 1,000 500 Job 602 was started in May, and the following costs were assigned to it in May: direct materials, $500; direct labor, $250; and overhead, $125. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate as a percent of direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. The company's predetermined overhead rate did not change over these months. Required: 1. What is the cost of direct materials used in June for each of the three jobs and in total? 2. What is the cost of direct labor used in June for each of the three jobs and in total? 3. What predetermined overhead rate is used in June? 4. How much cost is transferred to finished goods inventory in June? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 How much cost is transferred to finished goods inventory in June? Job Direct Materials Direct Labor Overhead Applied Total Cost Cost transferred to finished goods 602 $ 500 $ 2,900 740 603 5,820 604 1,150 6,050 Total $ 2,390 $ 14,770 1,400 $ 3,600 2,600 7,600 $ 1,000 $ 1,480 2,300 4,780 $ Costs of Ending WIP
The computer workstation furniture manufacturing that Santana Rey started is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs. Job 602 $ 1,400 Direct materials Direct labor Overhead applied Job 603 $ 3,600 1,480 740 Job 604 $ 2,600 2,300 1,150 1,000 500 Job 602 was started in May, and the following costs were assigned to it in May: direct materials, $500; direct labor, $250; and overhead, $125. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate as a percent of direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. The company's predetermined overhead rate did not change over these months. Required: 1. What is the cost of direct materials used in June for each of the three jobs and in total? 2. What is the cost of direct labor used in June for each of the three jobs and in total? 3. What predetermined overhead rate is used in June? 4. How much cost is transferred to finished goods inventory in June? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 How much cost is transferred to finished goods inventory in June? Job Direct Materials Direct Labor Overhead Applied Total Cost Cost transferred to finished goods 602 $ 500 $ 2,900 740 603 5,820 604 1,150 6,050 Total $ 2,390 $ 14,770 1,400 $ 3,600 2,600 7,600 $ 1,000 $ 1,480 2,300 4,780 $ Costs of Ending WIP
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:### Job Cost Accounting for Furniture Manufacturing
#### Overview
The computer workstation furniture manufacturing business that Santana Rey established is showing satisfactory progress. By the end of June, Business Solutions' job cost sheets detail the total costs allocated to three furniture jobs:
| Costs | Job 602 | Job 603 | Job 604 |
|-------------------------|---------|---------|---------|
| **Direct Materials** | $1,400 | $3,600 | $2,600 |
| **Direct Labor** | $1,000 | $1,480 | $2,300 |
| **Overhead Applied** | $500 | $740 | $1,150 |
#### Cost Allocation and Job Progress
- **Job 602**: Initiated in May and attributed with May-specific costs of $500 for direct materials, $250 for direct labor, and $125 for overhead.
- **Jobs 603 and 604**: Both initiated in June.
- Overhead is allocated based on a predetermined rate calculated as a percentage of direct labor costs. This rate has been consistent over the past several months.
- **Job Completion**: Jobs 602 and 603 reached completion in June, whereas Job 604 is projected to be completed in July.
#### Required Analyses
1. **Direct Materials Costs Utilized in June**:
- Job 602: $1,400 - $500 (costs in May) = $900.
- Job 603: $3,600.
- Job 604: $2,600.
- **Total**: $900 + $3,600 + $2,600 = $7,100.
2. **Direct Labor Costs Utilized in June**:
- Job 602: $1,000 - $250 (costs in May) = $750.
- Job 603: $1,480.
- Job 604: $2,300.
- **Total**: $750 + $1,480 + $2,300 = $4,530.
3. **Predetermined Overhead Rate Used in June**:
- The predetermined overhead rate is calculated as the overhead applied ($500 + $740 + $1,150 = $2,390) over the direct labor costs in June ($750 + $1,480 + $2,300 = $4,530).
-
Transcribed Image Text:### Cost Accumulation for Computer Workstation Furniture Manufacturing
The computer workstation furniture manufacturing that Santana Rey started is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs:
| Cost Type | Job 602 | Job 603 | Job 604 |
|-----------------------|---------|---------|---------|
| Direct materials | $1,400 | $3,600 | $2,600 |
| Direct labor | $1,000 | $1,480 | $2,300 |
| Overhead applied | $500 | $740 | $1,150 |
### Cost Details:
- **Job 602** was started in May, and the following costs were assigned to it in May:
- Direct materials: $500
- Direct labor: $250
- Overhead: $125
- **Job 603** and **Job 604** were started in June.
- Overhead cost is applied with a predetermined rate as a percent of direct labor costs.
- Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July.
- The company’s predetermined overhead rate did not change over these months.
### Required Calculations:
1. **Direct Materials Used in June**
Calculate the cost of direct materials used in June for each of the three jobs and in total.
2. **Direct Labor Used in June**
Calculate the cost of direct labor used in June for each of the three jobs and in total.
3. **Predetermined Overhead Rate**
Determine the predetermined overhead rate used in June.
4. **Cost Transferred to Finished Goods Inventory**
Calculate the total cost transferred to finished goods inventory in June.
### Data Input Section:
Users are required to enter their answers in the tabs provided below for each requirement.
#### Example Table for Direct Materials Used in June:
| | Job 602 | Job 603 | Job 604 | Total |
|-----------------|---------|---------|---------|--------|
| **May Costs** | $500 | - | - | $500 |
| **June Costs** | | | | |
| **Total** | $1,400 | $3,600 | $2,600 | $7,600 |
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