Incomplete data — job costing. Premier Printing, Inc.. is a rapidly growing company that has not been profitable despite increases in sales. It has hired you as a consultant to find ways to improve the situation. You believe that the problem results from poor cost control and inaccurate cost estimation on jobs. To gather data for your investigation, you turn to the accounting system and find that it is a mess. However, you piece together the following information for April:

Production

a. Completed Job 101 .

b. Started and completed Job 102.

c. Started Job 103.

Inventory Values

a. Work-in-process inventory:

b. Each job in work-in-process inventor) w as exactl) 50 percent completed as to labor hours; however, all of the direct materials necessary to do the entire job were charged to each job as soon as it was started.

c. There were no direct materials inventoiies or finished goods inventories at either March 31 or April 30.

Overhead

a. Actual manufacturing overhead was $20,000.

b. The company had sold jobs 101 and 102.

You find limited information about the cost of these two jobs from a spreadsheet. These two jobs make up the total cost of goods sold (before adjustment for over- or underapplied overhead) for the month of April:

c. Overhead was applied to jobs using a predetermined rate per labor dollar that has been used since the company began operations.

d. All direct materials were purchased for cash and charged directly to Work-in-
Process Inventory when purchased. Direct materials purchased in April amounted to $4,600.

e. Direct labor costs charged to jobs in April were $32,000. All labor costs were the same per hour for April for all laborers.
Write a report to management to show:

a. The cost elements (material, labor, and overhead) of cost of goods sold before adjustment for o ver- or underapplied overhead for each of the two jobs sold.

b. The value of each cost element (material, labor, and overhead) for each job in work-in-process inventory at April 30.

c. Over- or underapplied overhead for April.

Transcribed Image Text:

March 31: Job 101 Direct materials Labor (960 hours $10) April 30: Job 103 Direct materials Labor (1,040 hours $10) $2.000 9.600 $ 1,600 10.400