Wed 18 May, 2016 08:57 am
Cleg Iron Works produces ornate iron grills to customer’s specifications. It uses a normal costing system and applies overhead based on direct labour hours. Any under-applied or over-applied overhead is adjusted to the cost of goods sold account.
On 1 April, the Finished Goods and Work-in-Process inventory accounts consist of Job 200 and Job 201 respectively:
Job 200 Job 201
Direct materials $ 35,900 $ 20,000
Direct labour cost 27,000 12,000
Applied overhead 21,600 9,600
Total cost 84,500 41,600
Job Status Finished Goods Work-in-Process
On 30 April, there was only one job remaining in the Finished Goods
Direct materials $29,700
Direct labour cost 22,000
Applied overhead 17,600
Total cost 69,300
Job Status Finished Goods
Besides working on Job 201 in April, the company started work on Job 202 and Job 203 and incurred the following costs:
Job 202 Job 203
Direct materials $12,500 $5,550
Direct labour hours 1,000 750
On 30 April, Job 202 and Job 203 were still in process.
All factory workers are paid $20 per hour.
All sales are billed at 150% of total cost.
The costs incurred in the month of April comprised:
Office Equipment 4,000
Plant & Machinery 7,000
General administration 800
Selling and administrative expenses 20,000
Factory rent 12,000
Indirect materials used 1,200
Indirect labour 15,000