Quiz 20 - 7-27 Mary’s Landscaping uses a job order cost...

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Unformatted text preview: 7-27 Mary’s Landscaping uses a job order cost system. The following debits (credits) appeared in Work-In-Process Inventory for August: Description Amount August 1 Balance $6,250 For the month Direct Materials 40,500 For the month Direct Labor 27,000 For the month Factory Overhead 21,600 For the month To finished goods (81,000) Mary’s applies overhead to production at a predetermined rate of 80 percent based on direct labor cost. Job 3318, which was started during August and is the only job still in process at the end of august, has been charged direct labor of $3,375. Required: What cost amount of direct materials was charged to Job 3318? ANSWER: Given that job 3318 is the only job in process so the entire closing balance of WIP relates to it. Further, direct labor charges are $3,375 (given) and factory overhead is $2,700 (80% of direct labor cost). Hence the direct material charge is $8,275, arrived as follows: WIP closing balance Less: Direct labor Less: Factory overhead 14,350 3,375 2,700 --------Direct Material 8,275 ===== Where in closing WIP is arrived as follows: Opening WIP 6,250 Add: Direct Material 40,500 Add: Direct Labor 27,000 Add: Factory Overhead 21,600 Less: Transferred to Finished Goods - 81,000 Closing WIP --------14,350 ===== ...
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This note was uploaded on 11/11/2011 for the course COST ACCOU 101 taught by Professor Dennis during the Spring '11 term at Post.

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Quiz 20 - 7-27 Mary’s Landscaping uses a job order cost...

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