Lowland Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.

Activity	Cost	Driver	Amount of driver
setups	$150,000	number of setups	6,000
purchasing	60,000	number of parts	20,000
other overhead	112,500	direct labor hours	75,000

The following information about the jobs was given for September.

	Job 1001	Job 1002	Job 1003	Job 1004
Balance 9/1	$44,900	$60,700	$30,500	0
direct materials	54,000	37,000	25,000	41,000
direct labor	80,000	38,500	43,000	71,000
number of setups	40	10	30	200
number of parts	300	180	400	500
direct labor hours	5,000	2,400	5,200	1,200

By September 30, Jobs 1001 and 1003 were completed and sold. The remaining jobs were still in process. Required: 1. Calculate the activity rates for each overhead activity. 2. Calculate the cost of each job for September 30. 3. What is the beginning work in process on September 1 and October 1? 4. What is the cost of goods manufactured? 5. What is the cost of goods sold? 6. Draw the T account for work in process. (include all debits and credits) Prepare the Statement of the Cost of Goods Manufactured.

ANSWER:

1.

Activity	Cost	Amount of Driver	Activity rate
setups		6,000
purchasing		20,000
other overhead		75,000

2.

	Job 1001	Job 1002	Job 1003	Job 1004	Total
Balance 9/1	$ 44,900	$ 60,700	$ 30,500	0	136,100
dm	54,000	37,000	25,000	41,000	157,000
dl	80,000	38,500	43,000	71,000	232,500
# setups $20					5,600
# parts $4	?	?	?	?	?
dlhours $2	?	?	?	?	?
TOTAL	?	?	?	?	?

3. BWIP = ?

EWIP 9/30 = BWIP 10/1 = jobs 1002 + 1004 = ?

4. CGM = jobs 1001 + 1003 = ?

5. CGS = jobs 1001 + 1003 = ?

6.

		WIP
BI	?	?
DM	?
DL	?
MOH	?
EI	?

STATEMENT OF COST OF GOODS MANUFACTURED Lowland Corporation Month of September
Direct materials used in production ?
Direct labor ?
Manufacturing overhead applied ?
Total manufacturing costs added ?
Add: beginning work in process ?
Less: ending work in process ?
Cost of Goods manufactured ?