COSTING SYSTEMS Arbour Tools Ltd, manufacturer of garden tools, uses job costing to assign costs to its products. Job T152A, consisting of metal shears, was the only job in process at the end of April. The ending Work-in-Process inventory for April shows the following costs for Job T152A: $ Direct labour 14,000 Direct materials 28,000 Applied manufacturing overhead 21,000 Jobs B672C, T219V and G108T were started in May. At the end of May, all jobs were completed, except for Job G108T, which remained as work in process. Job G108T incurred the following costs: $19,600 for direct materials and $12,600 for direct labour. Manufacturing overhead is applied to all jobs at a predetermined overhead rate of 150% of direct labour cost. Additional information provided: (a) Direct materials used during May totalled $182,000. (b) Direct labour cost of $140,000 was incurred during May. (c) Any over-applied or under-applied manufacturing overhead is closed to cost of goods sold at the end of each month. (d) Manufacturing overhead incurred in May was $200,000. Required: Show ALL your workings. i. Calculate the cost of goods manufactured for May. ii. Calculate the amount of over-applied or under-applied manufacturing overhead for May. iii. Prepare a journal entry to close the manufacturing overhead account for May. iv. Prepare the ledger account in T-form for the May Work-in-Process Inventory.
COSTING SYSTEMS
Arbour Tools Ltd, manufacturer of garden tools, uses
products. Job T152A, consisting of metal shears, was the only job in process at the end of
April. The ending Work-in-Process inventory for April shows the following costs for Job
T152A:
$
Direct labour 14,000
Direct materials 28,000
Applied manufacturing overhead 21,000
Jobs B672C, T219V and G108T were started in May. At the end of May, all jobs were
completed, except for Job G108T, which remained as work in process.
Job G108T incurred the following costs: $19,600 for direct materials and $12,600 for direct
labour. Manufacturing overhead is applied to all jobs at a predetermined overhead rate of
150% of direct labour cost.
Additional information provided:
(a) Direct materials used during May totalled $182,000.
(b) Direct labour cost of $140,000 was incurred during May.
(c) Any over-applied or under-applied manufacturing overhead is closed to cost of goods
sold at the end of each month.
(d) Manufacturing overhead incurred in May was $200,000.
Required: Show ALL your workings.
i. Calculate the cost of goods manufactured for May.
ii. Calculate the amount of over-applied or under-applied manufacturing overhead for May.
iii. Prepare a
iv. Prepare the ledger account in T-form for the May Work-in-Process Inventory.
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