Kid's World Manufacturing Company is a manufacturer of furnishings for infants and children. The company uses job costing and employs a full absorption accounting method for cost accumulation. Kid's World Work-in-Process Inventory on April 30 consisted of the following jobs:Job No.ItemsUnits Accumulated CostCBSI02Cribs20,000 $900,000PLP086Playpens15,000 420,000DRS114Dressers25,000 250,000Total $1,570,000Kid's World applies manufacturing overhead on the basis of direct labor-hours. The company's estimated manufacturing overhead for the period ending May 31 totals $4,500,000; the company estimated it would use 600,000 direct labor-hours during the year.At the end of April, the balance in Kid's World Materials Inventory, which includes both materials and purchased parts, was

Question

$668,000. Additions to, and requisitions from, the materials inventory during the month of May included the following: Materials Purchased PartsPurchased$242,000  $396,000 Requisitions:       Job CBS102 51,000   104,000 Job PLP086 3,000   10,800 Job DRS114 124,000   87,000 Job STR077 (10,000 strollers) 62,000   81,000 Job CRG096 (5,000 carriages) 65,000   187,000 During the month of May, Kid's World factory payroll consisted of the following: Hours CostJob CBS102 12,000  $122,400 Job PLP086 4,400   43,200 Job DRS114 19,500   200,500 Job STR077 3,500   30,000 Job CRG096 14,000   138,000 Indirect supervision     57,600 Total    $591,700 Listed below are the jobs that were completed and the units that were sold during the month of May.Job No.ItemsQuantity CompletedCBS102Cribs20,000PLP086Playpens15,000STR077Strollers10,000CRG096Carriages5,000Required:(a) Compute the value of Kid's World Work-in-Process Inventory on May 31.(b) Compute the value of Kid's World Cost of Goods Manufactured for May.

What will be an ideal response?

Answer 1

Overhead rate: $4,500,000/600,000 hrs = $7.50/hr.

(a)
WIP 5/31: Job DRS114: $250,000 (beginning bal) + $124,000 (materials) + $87,000 (purchased parts) + $200,500 (labor) + (19,500 × $7.50) (overhead) = $807,750.

(b)
COGM: $1,267,400 (CBS102) + $510,000 (PLP086) + $199,250 (STR077) + $495,000 (CRG096) = $2,471,650.
CBS102: $900,000 + $51,000 + $104,000 + $122,400 + (12,000 × $7.50) = $1,267,400.
PLP086: $420,000 + $3,000 + $10,800 + $43,200 + (4,400 × $7.50) = $510,000.
STR077: $0 + $62,000 + $81,000 + $30,000 + (3,500 × $7.50) = $199,250.

CRG096: $0 + $65,000 + $187,000 + $138,000 + (14,000 × $7.50) = $495,000.