ErgoFurn, Inc. manufactures ergonomically designed computer furniture. ErgoFurn uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs:
.:.
On November 30, ErgoFurn's Raw Materials Inventory account totaled $668,000, and its Finished Goods Inventory totaled $3,456,400. ErgoFurn applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totaled $4,500,000, and the company planned to use 900,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 830,000 machine hours, total factory overhead amounted to $4,274,500, and Cost of Goods Sold was $8,750,250. ErgoFurn purchased $638,000 in raw materials in December and incurred the following costs for jobs in process that month:
.:.
The following jobs were completed in December and transferred to the Finished Goods Inventory:
.:.
Required
a. Calculate the total cost of each of the four jobs worked on in December.
b. Calculate the total manufacturing cost for December.
c. Calculate the cost of goods manufactured for December.
d. Calculate the balance in the Work in Process Inventory account on December 31.
e. Assume that ErgoFurn sold 15,000 computer caddies, 12,000 chairs, and 4,500 desks in December. Calculate Cost of Goods Sold and the ending Finished Goods Inventory balance for December.
SOLUTION:
a.
| CC723 | CH291 | PS812 | DS444 | ||
|---|---|---|---|---|---|
| Beg. Balance | $900,000 | $431,000 | $250,000 | ||
| Added in December | |||||
| Direct Material | 155,000 | 13,800 | 211,000 | $252,000 | $252,000 |
| Direct Labor | 122,400 | 43,200 | 200,500 | 138,000 | 138,000 |
| Overheada | 60,000 | 22,000 | 97,500 | 70,000 | 70,000 |
| Total Cost Added | 337,400 | 79,000 | 509,000 | 460,000 | 460,000 |
| Total Cost to Date | $1,237,400 | $510,000 | $759,000 | $460,000 | $460,000 |
aOverhead is applied using the following rate: = $5/MH.
Applied Overhead for December
Job CC723: 12,000 MH × $5/MH = $60,000
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