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A manufacturing business worked on four jobs during a period:
Job 1 Job 2 Job 3 Job 4
$ $ $ $
Work in progress at the beginning of the period 5,260 3,170 6,940 –
Direct Materials in the period 1,120 4,650 6,010 3,360
Direct Labour in the period 580 3,970 5,170 2,980Production overheads totaled $11,430 in the period and are absorbed into the cost of jobs as a percentage of direct labour cost.
Job 1, 3 and 4 were all completed in the period
What is the value of the closing work in progress at the end of the period?
The answer is $ 15,363.
Please explain.
The source is an online past paper from https://chongsk818.blogspot.com/2014/08/ma1-mock-test-2-answers.html
If Jobs 1,3 and 4 are completed they do not contribute to WiP. So, looking at Job 2:
B/f cost = 3,170
Materials added = 4,650
Labour added = 3,970
Total so far = 11,790.Overheads added to Job 2 = 11,430 x 3,970/(580 + 3970+ 5170 + 2980) = 3,573
Total = 11,790 + 3,573 = 15,363
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