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, 2023 raw materials inventory balance was $19,000. Actual overhead for January was $102,500 and Direct Labor Hours for January totaled 2,975. The January 31, 2023 raw materials inventory balance was $25,000. During January 2023, Jobs No. 21 & 22 were completed. A single Job, No. 22, was sold for $120,000 during January 2023. Costing information for jobs 20, 21, 22 and 23 are below. Job No. Direct Materials Direct Labor 20 $ 2222 21 $ $ 23 $ 8,000 $ 3,000 $ 7,000 $ 3,000 $ 18,600 12,400 13,950 3,100 Direct Labor Hours 1,200 800 900 200 The predetermined overhead rate for 2023 is based on the company's estimated total manufacturing overhead during all of 2023 which is $1,365,000 and the estimated total direct labor hours of 39,000. 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 2023. Your Excel Spreadsheet must include formulas, formatted cells and at least once text box. Tasks: 1. Correctly calculate predetermined overhead rate 2. Correctly calculate the balances of the inventory accounts at January 31, 2023 indicating which jobs are included as applicable. 3. Correctly calculate gross profit for January 2023 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, 2023 raw materials inventory balance was $19,000. Actual overhead for January was $102,500 and Direct Labor Hours for January totaled 2,975. The January 31, 2023 raw materials inventory balance was $25,000. During January 2023, Jobs No. 21 & 22 were completed. A single Job, No. 22, was sold for $120,000 during January 2023. Costing information for jobs 20, 21, 22 and 23 are below. Job No. Direct Materials Direct Labor 20 $ 2222 21 $ $ 23 $ 8,000 $ 3,000 $ 7,000 $ 3,000 $ 18,600 12,400 13,950 3,100 Direct Labor Hours 1,200 800 900 200 The predetermined overhead rate for 2023 is based on the company's estimated total manufacturing overhead during all of 2023 which is $1,365,000 and the estimated total direct labor hours of 39,000. 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 2023. Your Excel Spreadsheet must include formulas, formatted cells and at least once text box. Tasks: 1. Correctly calculate predetermined overhead rate 2. Correctly calculate the balances of the inventory accounts at January 31, 2023 indicating which jobs are included as applicable. 3. Correctly calculate gross profit for January 2023 indicating which jobs are included as applicable
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: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, 2023 raw materials inventory
balance was $19,000. Actual overhead for January was $102,500 and Direct Labor Hours for January
totaled 2,975. The January 31, 2023 raw materials inventory balance was $25,000. During January
2023, Jobs No. 21 & 22 were completed. A single Job, No. 22, was sold for $120,000 during January
2023. Costing information for jobs 20, 21, 22 and 23 are below.
Job No. Direct Materials Direct Labor
20
$
21
$
$
22
23
$
es is
es es
8,000 $
3,000 $
7,000 $
3,000 $
18,600
12,400
13,950
3,100
Direct Labor Hours
1,200
800
900
200
The predetermined overhead rate for 2023 is based on the company's estimated total manufacturing
overhead during all of 2023 which is $1,365,000 and the estimated total direct labor hours of 39,000.
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 2023.
Your Excel Spreadsheet must include formulas, formatted cells and at least once text box.
Tasks:
1. Correctly calculate predetermined overhead rate
2. Correctly calculate the balances of the inventory accounts at January 31, 2023 indicating which
jobs are included as applicable.
3. Correctly calculate gross profit for January 2023 indicating which jobs are included as applicable.
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