Question

Bynum Manufacturing uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2012, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of January 1, Job No. 49 had been completed at a cost of $90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account. Problems: Set A 953 During the month of January, Bynum Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $90,000 on account. 2. Incurred factory labor costs of $65,000. Of this amount, $16,000 related to employer payroll 3. Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect labor $15,000; depreciation expense on equipment $19,000; and various other manufacturing overhead costs on account $20,000. 4. Assigned direct materials and direct labor to jobs as follows.

Answer 1

The ending balance in Finished Goods Inventory for Bynum Manufacturing as of January 31, 2012, is $0. This calculation is based on beginning finished goods and the costs to complete and sell Job No. 49 and 50, with the absence of detailed costs for Job No. 51

To calculate the ending balance in the Finished Goods Inventory for Bynum Manufacturing as of January 31, 2012, consider the following:

Job No. 49 was completed at a cost of $90,000 and was part of the beginning finished goods inventory.

Job No. 50 was completed and sold; costs associated before January 1 were $20,000 (materials), $12,000 (labor), and $16,000 (manufacturing overhead), totaling $48,000.

Job No. 51 was completed and sold; however, the costs associated with this job during January are not provided, so we cannot quantify the cost for this job in the calculation.

Jobs 49 and 50 were sold for $122,000 and $158,000 respectively, but these selling prices are not included in inventory calculations.

Thus, the ending balance in the Finished Goods Inventory equals the finished goods at the beginning plus the cost of goods manufactured during the period, minus the cost of goods sold during the period.

As we only have information for Job No. 49, which was in the beginning inventory and Job No. 50, which was completed, we would only consider these for the calculation.

This would imply:

Beginning Inventory (Job No. 49): $90,000

Add: Costs to complete Job No. 50 ($20,000 + $12,000 + $16,000): $48,000

Less: Cost of Jobs sold (Assumed Job No. 49 and 50): ($90,000 + $48,000)

Ending Finished Goods Inventory: $0 (since Jobs 49 and 50, which are the only known costs, were both sold)

As there is no information on the costs for Job No. 51, we cannot add any amount for this job to the finished goods inventory.

Therefore, the ending balance for the Finished Goods Inventory is $0, assuming all costs relate to the jobs sold, and no other jobs were left in the inventory.

The probable question may be:

In a job order cost system, Bynum Manufacturing started the year with Job No. 50 in process. Prior to January 1, 2012, direct materials, direct labor, and manufacturing overhead costs for Job No. 50 were $20,000, $12,000, and $16,000, respectively. Job No. 49 was completed at a cost of $90,000 and was part of finished goods inventory on January 1. Additionally, raw materials inventory had a balance of $15,000.

During January, Bynum Manufacturing began production on Jobs 51 and 52, completing Jobs 50 and 51. Jobs 49 and 50 were also sold on account for $122,000 and $158,000, respectively. Throughout the month, various events occurred, including the purchase of additional raw materials, factory labor costs, and manufacturing overhead costs.

As of January 31, 2012, calculate the ending balance in the Finished Goods Inventory account, considering the completed and sold jobs, and taking into account the additional costs incurred during the month. Provide a detailed breakdown of the computations and categorize the costs according to direct materials, direct labor, and manufacturing overhead