Costing Method BPP Question

This topic has 3 replies, 3 voices, and was last updated 3 years ago by John Moffat.

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October 8, 2022 at 4:27 pm #668125
bazif17
Participant
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Good Afternoon John,

JK Co makes special assemblies to customers’ ordered and uses job costing.

The data for a period are:

Job Number
AA10
$
Opening WIP : 26800
Materials added in period 17275
Labour for period: 14500

Job Number
BB15
$
Opening WIP: 42790
Materials added in period: 0
Labour for period: 3500

Job number
CC20
$
Opening WIP: 0
Materials : 18500
Labour: 24600

The budgeted overheads for the period were 126,000.
Job number BB15 was completed on the last day of the period.

What was the approximate value of closing WIP at the end of the period?

Answer:

AA10 (26800+17275+14500)+(14500/42600 x 126000) = 101462

CC20 (18500 +24600+ 72761) = 115861

Please can you explain where 72761 came from?

Many thanks,
October 9, 2022 at 8:58 am #668159
John Moffat
Keymaster
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It is the proportion of overheads allocated to CC20.

24,600/42600 x 126,000 = 72,761
October 9, 2022 at 1:30 pm #668167
reckless
Participant
- Topics: 45
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Sir but question doesn’t asks us to allocate overheads, shouldn’t we find oar first since overheads are usually based on labour cost/hrs, 126,000/42600?
October 9, 2022 at 4:52 pm #668177
John Moffat
Keymaster
- Topics: 57
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Yes, but that gives the same result (and this is the way that has been used for AA10 also).
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