Question

Rockville, Inc. which uses a job costing system, began business on January 1, 20X3 and applies to manufacture overhead on the basis of direct labor cost. The following information relates to 20X3: Budgeted direct labor and manufacturing overhead were anticipated to be $200,000 and $250,000, respectively. Jobs number #1, #2, and #3 were begun during the year and had the following charges for direct material and direct labor:

Job number DM DL
#1 $145,000 $35,000
#2 320,000 65,000
#3 55,000 80,000
Job #1 and #2 were completed and sold on account to customers at a profit of 60% of the cost. Job #3 remained in production. The actual manufacturing overhead by year-end totaled $233,000. Rockville adjusts all under- and overapplied to the cost of goods sold.
Required:
Compute Rockville's ending WIP inventory
Compute Rockville's COG Manufactured
Compute Rockville's income statement.

Answer 1

Rockville's ending WIP inventory= $ 135,000

Rockville's COG Manufactured Total Cost of Goods Manufactured = $ 815,000

Net Income $ 793,800

Step-by-step explanation:

Rockville, Inc.

Budgeted Direct Labor $200,000

Manufacturing Overhead $250,000,

Job number DM DL

#1 $145,000 $35,000

#2 320,000 65,000

#3 55,000 80,000

Rockville's ending WIP inventory= Job#3 = Direct Materials + Direct Labor = 55,000 + 80,000= $ 135,000

Rockville's COG Manufactured

= Job #1 + Job #2= Direct Materials + Direct Labor = $145,000 + $35,000 + 320,000 + 65,000= 565,000

Applied Overhead $250,000

Total Cost of Goods Manufactured = $ 815,000

Less Ending Inventory $ 135,000

Cost of Goods Sold= $ 500,000

Actual Manufacturing Overhead = $ 233,000

Applied Overhead $250,000

Less Over applied Overhead $ 17,000

Adjusted Cost of Goods Sold $ 483,000

Rockville's income statement.

Sales $ 798,000*1.6= $ 1276,800

Less COGS $ 483,000

Net Income $ 793,800