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Pribil Farm Equipment is a job-order costing manufacturer that uses a plantwide overhead rate based on direct labor hours. Estimations for the year include $420,000 in overhead and 30,000 direct labor hours. Pribil worked on five jobs in March. Data are as follow:
Job 89
Balance, 3/1: $23,110
Direct materials: 13,000
Direct labor cost: $8,075
Direct labor hours: 1,615
————————–
Job 90
Balance, 3/1: $18,240
Direct materials: 17,210
Direct labor cost: $11,500
Direct labor hours: 2,300
—————————
Job 91
Balance, 3/1: $9,510
Direct materials: 22,900
Direct labor cost: $16,250
Direct labor hours: 3,250
—————————-
Job 92
Balance, 3/1: $0
Direct materials: 15,240
Direct labor cost: $9,750
Direct labor hours: 1,950
—————————-
Job 93
Balance, 3/1: $0
Direct materials: 8,210
Direct labor cost: $4,860
Direct labor hours: 972
—————————-By March 31, Jobs 89 and 91 were completed and sold. The rest of the jobs remained in process.
A. Calculate the plantwide overhead rate –> my ans is $14 per direct labor hour
B. Calculate the Work in Process on March 31.
C. Calculate the cost of goods sold for March.
D. Assume Pribil marks up cost by 40%. What is the selling price of Jobs 89 and 91?Your answer for part A is correct.
For part B, it is only jobs 90, 92, and 93 that are relevant (because the other two were completed).
For each of them, to calculate the WIP you simply need to add up all the costs and include overheads at $14 per labour hour.
(So, for example, the value of the WIP for job 90 is 18240 + 17210 + 11500 + (2300 x 14) = $79,150 – do the same for all of them and add them up!)For Part C, it is exactly the same as the working for part B, but for jobs 89 and 91.
For Part D, simply take your answers from part C and for each of them add on 40%.
Thanks a lot for your help !
Just a bit confusion here and need to ask to clarify. If I consider using this formula:
End WIP = Beg WIP + Direct Materials used + Direct Labor used + Overhead – Cost of goods manufactured.
Then what is the cost of goods manufactured in this case?
The closing WIP is the opening WIP + Materials + labour + overhead.
You do not subtract cost of goods manufactured.(This is not normal process costing where some units are completed and some are still WIP. These are specific jobs and either the whole job is finished, or the whole job is still unfinished (i.e. WIP).)
Hi,
I am not sure I should open a new topic or just post here. There is another job-order costing related question.
I could figure out most of the answers except the Department 2, direct labour cost of Job 217.
The question tells you the total manufacturing cost.
So……if you subtract the overhead costs, the material costs, and the direct labour cost for department 1 – then I think you will have what you want 🙂
Oh, I just found I asked a silly question. Haha. I can just find total manufacturing cost first by using number of units x unit cost. But I tried getting direct labour cost for dept 1 first instead. Thank you for your help.
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