5-12

Components of Ending Work-in Process

The Oxford Company uses a job order cost system and applies factory overhead to jobs on the basis of direct Job labor cost. During the month of July, the following activities took place in the work-in-process account:

Work-in-process
Beginning Direct materials Direct labor Overhead applied	$15,000 10,000 30,000 15,000	To finished goods	$50,000

At the end of July, only one job (Job #15), was still in process. This job has been charged with $2,000 of direct materials cost.

Required: Determine the amount of direct labor cost incurred and overhead applied in the ending inventory of work-in-process on July 31.

5-28

Computation of Work-in-Process Inventory

On June 30, 20X8, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations:

Raw materials ----------$62,000

Work-in-process------- 0

Finished goods-------- 119,000

The inventory on January 1, 20X8, consisted of the following

Raw materials ----------$30,000

Work-in-process------- 100,000

Finished goods--------- 140,000

-------------------------------$270,000

A review of the books and records disclosed that the gross profit margin historically approximately 25% of sales. The sales for the first six months of 20X8 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $80,000 and manufacturing overhead has historically been applied at 50% of direct labor.

Required: Compute the value of the work-in-process inventory lost at June 30, 20X8. Show supporting computation in good form.