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Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs. The company’s work-in-process on December 31, 20×1, consisted of one job (no. 2077), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date. |
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Finlon applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company’s practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20×2 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000 respectively. Actual results for the year follow. |
| Direct material used | $5,550,000 |
| Direct labor | 4,350,000 |
| Indirect material used | 65,000 |
| Indirect labor | 2,860,000 |
| Factory depreciation | 1,740,000 |
| Factory insurance | 59,000 |
| Factory utilities | 832,000 |
| Selling and administrative expenses | 2,160,000 |
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| Total | $17,616,000 |
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Job no. 2077 was completed in January 20×2; there was no work in process at year-end. All jobs produced during 20×2 were sold with the exception of job no. 2143, which contained direct-material costs of $156,000 and direct-labor charges of $85,000. The company charges any under- or overapplied overhead to Cost of Goods Sold.
1. Determine the company’s predetermined overhead application rate. (Omit the “%” sign in your response.) 2. Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead. (Omit the “$” sign in your response.) 3. Compute the amount that the company would disclose as finished-goods inventory on the December 31, 20×2, balance sheet. (Omit the “$” sign in your response.) 4.
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8 years ago
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