Case 3-49

Avid Assemblers uses normal job-order costing to assign costs to products. The company assembles and packages 25 different products according to customer specifications. Products are worked on in batches of 20 to 40 units. Each batch is given a job number. On October 1, the company had the following balances:

Raw materials		$9,800
Work in process		65,847
Finished goods		30,640

Work in process consisted of the following jobs:

		Job 22		Job 24		Job 25
Direct materials		$6,200		$5,190		$4,800
Direct labour		10,500		9,210		9,500
Applied overhead		7,350		6,447		6,650
Total		$24,050		$20,847		$20,950
Number of units		20		40		30

Finished goods consisted of Job 23, with the following costs:

		Job 23
Direct materials		$8,200
Direct labour		13,200
Applied overhead		9,240
Total		$30,640
Number of units		50

Shown below are the direct cost data related to jobs started in October:

		Job 26		Job 27		Job 28		Total
Direct materials		$5,180		$5,600		$4,200		$14,980
Direct labour		11,200		9,340		5,910		26,450
Number of units		20		30		20

Other information:

1.

Direct materials and direct labour added to beginning work in process in October were as follows:

		Job 22		Job 24		Job 25		Total
Direct materials		$1,150		$610		$1,500		$3,260
Direct labour		3,000		4,500		5,500		$13,000

2.

Overhead is applied at a predetermined rate based on the direct labour cost.

3.

Actual expenses for October were as follows:

Supervisory salaries		$6,000		Supplies (factory)		$2,100
Factory rent		5,000		Selling expenses		8,500
Depreciation (machines)		5,000		Property tax and insurance		2,250
Indirect labour		4,000		CPP, EI, and other benefits*		4,200

* 80% of employer contributions and benefits relate to factory personnel.

4.

Purchases of direct materials (raw materials) during October amounted to $28,500. Indirect materials (supplies) are handled in a separate account.

5.

Only Job Nos. 27 and 28 are still in process at closing on October 31. Finished goods consisted only of Job No. 25 at month end.

6.

Avid writes off any under- and over-applied overhead to Cost of Goods Sold in the month in which it is incurred.

Requirements:

a.Calculate Predetermined overhead rate

b.Calculate Unit cost of job 24 in October

c.Calulate the Oct 31 Balances for the following account:

Raw Materials, Work in Process, Finished Goods

d.What is the cost of goods manufactured?

e. Determine the under- or over- paid in October

Prepare the journal entry to dispose of this amount.