help with managerial accounting- job order costing?
i need help. i'm not asking you to solve it I just don't even know where to start...i understand predetermined overhead rate would be the estimated total manufacturing costs/ estimated total amount of allocation base. direct labor hours would go under the allocation base (sorry if this makes it more confusing i'm just trying to help). please don't say "do your own homework", like i said i'm not asking for answers (which would be helpful) i just need an explanation.
The Lee Company uses a job-order costing system. The following data were recorded for June:
Added During June
Job Number , June 1 Work in Process Inventory , Direct Materials , Direct Labor
235 236 237 238
$2,300 $1,490 $950 $800
$540 $630 $1070 $1480
$290 $820 $1550 $2240
Overhead is charged to production at 60% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers.
Lee's Work in Process inventory balance on June 30 was:
- 1 decade agoFavorite Answer
So here's he deal. Job costing is one of the easiest to do, but it can be a bit tricky at first. Always start with a T account it'll make your life easier. You already know that just from reading the problem you will have one job left in work in progress (WIP) the other 3 are either finished, or finished and transferred out. Now, start with job 236, the only one that's left. This is because 235, 237, and 238 have been completed, and no longer work in progress. So take your beginning inventory (1,490), add in direct materials (630), and direct labor (820). Now you should have 2,940 in your work in progress account. Take your direct materials and allocate the overhead (60%) so that 630 x 60% = 378. Add this into the account so that you get 3,318. Your total work in progress. I know you said you didn't want it done for you, but it's the easiest way to explain it. So in short :
WIP = beg. WIP + DM + DL + OH
Do this for all of the remaining jobs that have not been completed. I was an accounting minor, and I figured that the easiest way to figure these confusing ones out was to write down everything you know, what jobs, which ones are finished, and which ones are still working.
So to go further if the question asked for what was the amount in finished goods you would do only job 237 because it's the only one in finished goods.
If the question asked for what amount was completed and transferred out, you would do the total of jobs 235 and 238, because those are no longer in raw materials, WIP, or finished goods.Source(s): Sam Houston State University
- msoexpertLv 64 years ago
We are separating everything out by job, not processing department. So we are dealing with job-costing. It's just a matter of how to actually calculate June 30 ending Work in Process. Now when you read through everything, you'll see that we really only have one job left that's still in production and not fully-completed or sold to customers. So it's very important to understand that Work in Process means those items we're still in the middle of working on. The ones we're not finished with yet and have more processing to do.
In this particular case, we only have job # 236 that's still in the works and not completely done yet. So we only need to focus our attention on this one. And we'd take the June 1 beginning Work in Process inventory for this job and use that as our starting point. We'd then need to add in the materials and labor necessary to get those units completed.
The question you now have to ask yourself is whether or not we need to add the overhead costs? One of the choices says no, you don't need to add this figure in. Another choice says you do! But if you do have to add it in, is it based on the direct labor cost? Or is it based on the direct material cost? And if you do have to base it on one of these, do you simply add the full amount? Or do you have to take the 60% overhead rate into consideration? A third choice says you use the full amount. And a fourth choice says you don't.
So I helped get you started by explaining the basics here. And helping you sift through all the miscellaneous information that's provided. You really need to focus on which of those jobs is still "in the works!"Source(s): I teach accounting, including managerial. And have degrees in accounting, finance, economics, and human resources.
- Jun AgrudaLv 71 decade ago
Work in process inventory (Job 236):
= $1,490 Beg + $630 Mat + $820 DL + 0.6($630) Applied Overhead
= $2,940 + $378
Answer: $3,318—the 2nd among the list of choices
- How do you think about the answers? You can sign in to vote the answer.
- JeanetteLv 45 years ago
A,B C are Process cost systems. Answer is D