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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:
Opening WIP : 26800
Materials added in period 17275
Labour for period: 14500
Opening WIP: 42790
Materials added in period: 0
Labour for period: 3500
Opening WIP: 0
Materials : 18500
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?
AA10 (26800+17275+14500)+(14500/42600 x 126000) = 101462
CC20 (18500 +24600+ 72761) = 115861
Please can you explain where 72761 came from?
It is the proportion of overheads allocated to CC20.
24,600/42600 x 126,000 = 72,761
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?
Yes, but that gives the same result (and this is the way that has been used for AA10 also).