Job Order Cost Flow
Laurence Norton is the chief financial officer of Rotham Industries, a company that makes special-order sound systems for home theaters. His records for February revealed the following information:
Beginning inventory balances
|
Materials Inventory |
$27,450 |
|
Work in Process Inventory |
22,900 |
|
Finished Goods Inventory |
19,200 |
Direct materials purchased and received
|
February 6 |
$ 7,200 |
|
February 12 |
8,110 |
|
February 24 |
5,890 |
Direct labor costs
|
February 14 |
$13,750 |
|
February 28 |
13,230 |
Direct materials requested for production
|
February 4 |
$ 9,080 |
|
February 13 |
5,940 |
|
February 25 |
7,600 |
Job order cost cards for jobs in process on February 28 had the following totals:
|
Job No. |
Direct Materials |
Direct Labor |
Overhead |
|
AJ-10 |
$3,220 |
$1,810 |
$2,534 |
|
AJ-14 |
3,880 |
2,110 |
2,954 |
|
AJ-15 |
2,980 |
1,640 |
2,296 |
|
AJ-16 |
4,690 |
2,370 |
3,318 |
The predetermined overhead rate for the month was 140 percent of direct labor costs. Sales for February totaled $152,400, which represented a 70 percent markup over the cost of production.
Required
1. Using T accounts for Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Overhead, Accounts Receivable, Payroll Payable, Sales, and Cost of Goods Sold, reconstruct the transactions in February.
2. Compute the cost of units completed during the month.
3. What was the total cost of goods sold during February?
4. Determine the ending balances in the inventory accounts.
5. During the first week of March, Jobs AJ-10 and AJ-14 were completed.
No additional direct materials costs were incurred, but Job AJ-10 needed $720 more of direct labor, and Job AJ-14 needed an additional $1,140 of direct labor. Job AJ-10 was 40 units; Job AJ-14, 55 units. Compute the product unit cost for each completed job (round to two decimal places).