Question
Liliana Richmond started KidCo, Inc. in Albuquerque, New Mexico to produce affordable childrens furnishings. The company uses a job-order costing system. KidCos work-in-process inventory at
Liliana Richmond started KidCo, Inc. in Albuquerque, New Mexico to produce affordable childrens furnishings. The company uses a job-order costing system. KidCos work-in-process inventory at the end of November consisted of the following jobs .
Job No. | Description | Units | Accumulated Cost | ||
CBS102 | Cribs | 20,000 | $ | 900,000 | |
PLP086 | Playpens | 15,000 | 416,000 | ||
DRS114 | Dressers | 25,000 | 250,000 | ||
Total | $ | 1,566,000 | |||
The companys November 30 finished-goods inventory, which is valued using the FIFO (first-in, first-out) method, consisted of five items. |
Item | Quantity and Unit Cost | Accumulated Cost | |||
Cribs | 7,500 units @ $64 each | $ | 480,000 | ||
Strollers | 13,000 units @ $23 each | $ | 299,000 | ||
Carriages | 11,200 units @ $102 each | 1,142,400 | |||
Dressers | 21,000 units @ $55 each | 1,155,000 | |||
Playpens | 19,400 units @ $35 each | 679,000 | |||
Total | $ | 3,755,400 | |||
KidCo applies manufacturing overhead on the basis of direct-labor hours. The companys overhead budget for the year totals $4,500,000. The company plans to use 900,000 direct-labor hours during this period, which is the firms estimated practical capacity. Through the first 11 months of the year, a total of 831,000 direct-labor hours were worked, and total overhead amounted to $4,139,000. |
At the end of November, the balance in KidCos Raw-Material Inventory account, which includes both raw material and purchased parts, was $668,000. Additions to inventory and requisitions from inventory during December included the following. |
Purchases | Raw Material | Purchased Parts | ||
Purchases | $ | 242,000 | $ | 396,000 |
Requisitions: | ||||
Job CBS102 | 51,000 | 104,000 | ||
Job PLP086 | 3,000 | 10,800 | ||
Job DRS114 | 125,000 | 88,000 | ||
Job STR077 (10,000 strollers) | 62,000 | 81,000 | ||
Job CRG098 (5,000 carriages) | 65,000 | 187,000 | ||
During December, KidCos factory payroll consisted of the following: |
CBS102 | 12,000 hr | $ | 122,400 | |
PLP086 | 4,400 hr | 43,200 | ||
DRS114 | 19,500 hr | 200,500 | ||
STR077 | 3,500 hr | 30,000 | ||
CRG098 | 14,000 hr | 138,000 | ||
Indirect labor | 3,000 hr | 29,400 | ||
Supervision | 57,600 | |||
Total | 49,900 | $ | 621,100 | |
The following list shows the jobs that were completed and the unit sales for December. |
Production | Sales | ||||
Job No. | Items | Quantity Completed | Item | Quantity Shipped | |
CBS102 | Cribs | 20,000 | Cribs | 17,500 | |
PLP086 | Playpens | 15,000 | Playpens | 21,100 | |
STR077 | Strollers | 10,000 | Strollers | 14,000 | |
CRG098 | Carriages | 5,000 | Dressers | 18,000 | |
Carriages | 6,000 | ||||
1.
value: 1.00 points
Required information
Required: |
1. | Choose when it is appropriate for a company to use a job-order costing system. |
A job order costing system is appropriate in any environment where costs can be readily identified with specific products, batches, contracts, or projects. |
A job order costing system is appropriate in any environment where the costs are unidentifiable with specific products, batches, contracts, or projects. |
2.
value: 3.00 points
Required information
2. | Calculate the dollar balance in KidCos Work-in-Process Inventory account as of December 31. |
3.
value: 3.00 points
Required information
3. | Calculate the dollar amount related to the playpens in KidCos Finished-Goods Inventory account as of December 31. |
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