Exercise 2-6

Computing job costs and gross profit P1 P2 P3

Information on Kwon Mfg.s activities for its first month of operations follows.

a. Purchased $100,000 of raw materials on credit.

b. Materials requisitions show the following materials used for the month. Job 201 $48,200 Job 202 23,600 Total direct materials 71,800 Indirect materials 8,620 Total materials used $80,420

c. Time tickets show the following labor used for the month. Job 201 $39,200 Job 202 12,600 Total direct labor 51,800 Indirect labor 24,200 Total labor used $76,000

d. Applied overhead to Job 201 and to Job 202 using a predetermined overhead rate of 80% of direct materials cost.

e. Transferred Job 201 to Finished Goods Inventory.

f. (1) Sold Job 201 for $163,760 on credit. (2) Record cost of goods sold for Job 201.

g. Incurred the following actual other overhead costs for the month. Depreciation of factory equipment $32,000 Rent on factory building (payable) 500 Factory utilities (payable) 800 Expired factory insurance 3,000 Total other factory overhead costs $36,300

1. Prepare a job cost sheet for Job 201 and for Job 202 for the month. Use the following simplified form.

2. Compute gross profit on the sale of Job 201.