Question

Saratoga Systems produces a single product. The production process requires all material to be brought to the shop floor before any work begins. The material is then processed and assembled and then transferred to finished goods inventory. Every unit is completely identical in specification and use, and no customization is possible. Because of the cost of the product, only a few units are produced in any one month. During June, only three units were started, and these were labelled ID061, ID062, and ID063. There was no beginning inventory of any kind on June 1. Records from the raw material store and employee time records show the following requisitions and direct labor costs: The difference in the material cost represents the historical cost of material purchased at different times. The difference in labor cost represents the difference in seniority (not skill) of the individual employees. Overhead for the month of June totaled $65,100. During March, ID061 and ID062 were completed and transferred to finished goods. ID063 was still in process on June 30. Required: a. Suppose Saratoga Systems uses a job cost system and applies overhead to products based on direct labor cost. What will be the cost of the units transferred to finished goods? What will be the amount in Work-in-Process Ending Inventory? required: a. Suppose Saratoga Systems uses a job cost system and applies overhead to products based on direct labor cost. What will be the cost of the units transferred to finished goods? What will be the amount in Work-in-Process Ending Inventory? b. Suppose Saratoga Systems uses process costing and ID063 was 50 percent complete with respect to conversion cost (direct labe and overhead cost). Assume that direct materials cost is not traced to individual units. What will be the cost of the units transferrec to finished goods? What will be the amount in Work-in-Process Ending Inventory? c. Based on the provided information, does process costing appear to be sufficient? Complete this question by entering your answers in the tabs below. Suppose Saratoga Systems uses a job cost system and applies overhead to products based on direct labor cost. What will be the cost of the units transferred to finished goods? What will be the amount in Work-in-Process Ending Inventory? Note: Do not round intermediate calculations. cost of the units transferred to finished goods? What will be the amount in Work-in-Process Ending Inventory? o. Suppose Saratoga Systems uses process costing and ID063 was 50 percent complete with respect to conversion cost (direct la and overhead cost). Assume that direct materials cost is not traced to individual units. What will be the cost of the units transferr to finished goods? What will be the amount in Work-in-Process Ending Inventory? c. Based on the provided information, does process costing appear to be sufficient? Complete this question by entering your answers in the tabs below. Suppose Saratoga Systems uses process costing and ID063 was 50 percent complete with respect to conversion cost (direct labor and overhead cost). Assume that direct materials cost is not traced to individual units. What will be the cost of the units transferred to finished goods? What will be the amount in Work-in-Process Ending Inventory? Note: Do not round intermediate calculations. cost of the units transferred to finished goods? What will be the amount in Work-in-Process Ending Inventory? b. Suppose Saratoga Systems uses process costing and ID063 was 50 percent complete with respect to conversion cost (direct labo and overhead cost). Assume that direct materials cost is not traced to individual units. What will be the cost of the units transferred to finished goods? What will be the amount in Work-in-Process Ending Inventory? c. Based on the provided information, does process costing appear to be sufficient? Complete this question by entering your answers in the tabs below. Based on the provided information, does process costing appear to be sufficient?

Answer 1

Calculate total cost of each unit, calculate overhead allocation rate, allocate overhead to each unit, calculate total cost of goods completed, calculate cost of goods sold, and calculate ending balance in Work-in-Process Inventory. Based on the information provided, the cost of units transferred to finished goods is $97,144, and the amount in Work-in-Process Ending Inventory is $18,300.

1. Calculate the total cost of each unit:

Unit Direct Material Direct Labor Total Cost

ID061 $6,000 $7,200 $13,200

ID062 $9,000 $8,100 $17,100

2. Calculate the overhead allocation rate:

Overhead Allocation Rate = Overhead Cost / Total Direct Labor Cost

Overhead Allocation Rate = $65,100 / ($7,200 + $8,100) = $4.38 per dollar of direct labor cost

3. Allocate overhead to each unit:

Unit Direct Labor Overhead Allocation Rate Overhead Allocation

ID061 $7,200 $4.38 $31,536

ID062 $8,100 $4.38 $35,308

4. Calculate the total cost of goods completed:

Unit Direct Material Direct Labor Overhead Allocation Total Cost

ID061 $6,000 $7,200 $31,536 $44,736

ID062 $9,000 $8,100 $35,308 $52,408

5. Calculate the cost of goods sold (units completed):

Cost of Goods Sold = Total Cost of Goods Completed

Cost of Goods Sold = $44,736 + $52,408 = $97,144

6. Calculate the ending balance in Work-in-Process Inventory:

Unit Direct Material Direct Labor Overhead Allocation Total Cost

ID063 $12,000 $6,300 (Overhead is not applied to work-in-process inventory) $18,300

Therefore, the cost of units transferred to finished goods is \$97,144, and the amount in Work-in-Process Ending Inventory is $18,300.

Answer 2

To determine the cost of units transferred to finished goods and the amount in Work-in-Process Ending Inventory under a job cost system with overhead applied based on direct labor cost, follow these steps:

1. Calculate the total cost of each unit:

Unit Direct Material Direct Labor Total Cost

ID061 $6,000 $7,200 $13,200

ID062 $9,000 $8,100 $17,100

2. Calculate the overhead allocation rate:

Overhead Allocation Rate = Overhead Cost / Total Direct Labor Cost

Overhead Allocation Rate = $65,100 / ($7,200 + $8,100) = $4.38 per dollar of direct labor cost

3. Allocate overhead to each unit:

Unit Direct Labor Overhead Allocation Rate Overhead Allocation

ID061 $7,200 $4.38 $31,536

ID062 $8,100 $4.38 $35,308

4. Calculate the total cost of goods completed:

Unit Direct Material Direct Labor Overhead Allocation Total Cost

ID061 $6,000 $7,200 $31,536 $44,736

ID062 $9,000 $8,100 $35,308 $52,408

5. Calculate the cost of goods sold (units completed):

Cost of Goods Sold = Total Cost of Goods Completed

Cost of Goods Sold = $44,736 + $52,408 = $97,144

6. Calculate the ending balance in Work-in-Process Inventory:

Unit Direct Material Direct Labor Overhead Allocation Total Cost

ID063 $12,000 $6,300 (Overhead is not applied to work-in-process inventory) $18,300

Therefore, the cost of units transferred to finished goods is $97,144, and the amount in Work-in-Process Ending Inventory is $18,300.