question archive JN Corporation had only one job in process on June 1
JN Corporation had only one job in process on June 1
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JN Corporation had only one job in process on June 1. The job had been charged with Rs.3,400 of direct materials, Rs.4,840 of direct labor, and Rs.6,292 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate on the basis of direct labor cost.
During June, the following activity was recorded:
|
Raw materials (all direct materials): |
|
|
Beginning balance |
8,500 |
|
Purchased during the month |
42,000 |
|
Used in production |
49,500 |
|
Labor: |
|
|
Direct labor-hours worked during the month |
2,250 |
|
Direct labor cost incurred |
27,520 |
|
Actual manufacturing overhead costs incurred |
52,800 |
|
Inventories: |
|
|
Raw materials, June 30 |
? |
|
Work in process, June 30 |
37,190 |
Work in process inventory on June 30 contains Rs.9,940 of direct labor cost.
Calculate cost of Raw Materials at work in process, June 30,
Expert please be quick, got half an hour.
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Answer:
Calculate cost of Raw Materials at work in process, June 30,
JN Corporation is assigning/ allocating manufacturing overhead cost on jobs on the basis of direct labour cost.
So, Cost of Manufacturing overhead as % of direct labour cost will be:
| Formula= Manufacturing overhead cost (on Job)/ Direct labour cost (on Job) *100 |
| =6292/4840*100= 130% |
So, JN Corporation is assigning Manufaturing overhead rate as 130% of direct labour cost.
Now, Work-in-process invertory on June 30 contains Rs. 9940 as direct labour cost.
So, amount of cost of manufacturing overhead at work in process, June 30 will be-
| Formula= Manufacturing overhead rate*direct labour hours |
| =130%*9940= Rs. 12922 |
