misscarter Posts: 1, Reputation: 1 New Member   #1 Mar 19, 2012, 12:38 AM

Calculating WIP additions Finlon Upholstery, Inc. Uses a job-order costing system to accumulate manufacturing costs. The company's work-in-process on December 31, 20x1, consisted of one job (no. 2077), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date. Finlon applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company's practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20x2 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year follow. Direct Materials Used $5,600,000.00 Direct Labor $4,350,000.00 Indirect Material Used $65,000.00 Indirect Labor $2,860,000.00 Factory Depreciation $1,740,000.00 Factory Insurance $59,000.00 Factory Utilities $830,000.00 Selling and Administrative Expenses $2,160,000.00 Total $17,664,000.00 Job no. 2077 was completed in January 20x2; there was no work in process at year-end. All jobs produced during 20x2 were sold with the exception of job no. 2143, which contained direct- material costs of $156,000 and direct-labor charges of $85,000. The company charges any under- or overapplied overhead to Cost of Goods Sold. Calculate the companies predetermined overhead application rate. 2. Calculate the additions to the work-in-process inventory account for the direct material used, direct labor and manufacturing overhead. 3. Calculate the finished goods inventory for the 12/31/x2 balance sheet. 4. Calculate the over-applied or under applied overhead at year end. 5. Explain if it is appropriate to include the selling and administrative expenses within cost of goods sold.

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