Compufurn
- Job-order costing system is appropriate for a company with job-shop operations or batch-production operations. In a job-shop environment, products are manufactured in very low volumes or one at a time. In a batch production environment, multiple products are produced in batches of relatively small quantity. In job-order costing system, cost of direct material, direct labor, and manufacturing overhead are assigned to each production job.
- The job which includes in CompuFurn’s work-in-process inventory on Dec, 31 is only the job PS812. The cost of job PS812 is calculated as follows:
Job PS812 balance Nov, 31 | $250,000 | |
December additions: | ||
Direct material | $124,000 | |
Purchased parts | 87,000 | |
Direct labor | 200,500 | |
Manufacturing overhead (19,500 machine hours x $5) | 97,500 | 509,000 |
Work-in-process inventory Dec, 31 | $759,000 |
- Manufacturing Overhead Rate = [pic 1][pic 2] = $5 per machine hour
- The cost of the chair in CompuFurn Inc’s Finished-Goods Inventory in December 31
- Unit of Chair’s finished-goods inventory in December 31
Finished-Goods in November 31 | 19.400 |
(add) Complete in December | 15.000[pic 3] |
Available Finished-Goods | 34.400 |
(deduct) Ship in December 31 | 21.000[pic 4] |
Finished-Goods Inventory in December 31 (unit) | 13.400 |
Because of CompuFurn Inc. use FIFO inventory method all units finished in December,
- Unit cost of chairs completed in December :
Work in process inventory, November 30 | $431.000 |
December additions: | |
Direct Material | $3.000 |
Purchase parts | $10.800 |
Direct Labor | $43.800 |
Manufacturing Overhead (4.400 hour x $5) | $22.000[pic 5] |
$79.000[pic 6] | |
Total Cost | $510.000 |
Unit Cost = [pic 7][pic 8] = [pic 9][pic 10]= $34 per unit
Cost of Finished Good Inventory :
= Unit Cost x Finished Goods Inventory
= $34 x 13.400
=$455.600
- CompuFurn Inc.’s overlapplied or underapplied overhead for the year with actual manufacturing overhead incurred in December amounted to $252.000.
- Machine hours used
January - November | 830.000 |
December | 49.900[pic 11] |
Total (hour) | 879.900 |
Applied manufacturing overhead = 879.900 hours x $5 = $4.399.500
- Actual Manufacturing Overhead:
January - November | $4.140.000 |
December | $ 252.000[pic 12] |
Total | $4.392.000 |
Overapplied Overhead = applied overhead – actual overhead
= $4.399.500 – $4.392.000
= $7.500