Prepare Job-Order Cost Sheets, Predetermined Overhead Rate, Ending Balance of WIP, Finished Goods, and COGS At the beginning of March, Mendez Company had two jobs in process, Job 86 and Job 87, with the following accumulated cost information: Job 86 Job 87 Direct materials $4,800 $1,600 Direct labor 1,200 3,000 Applied overhead 888 2,220 Balance, March 1 $6,888 $6,820 During March, two more jobs (88 and 89) were started. The following direct materials and direct labor costs were added to the four jobs during the month of March: Job 86 Job 87 Job 88 Job 89 Direct materials $3,000 $7,000 $2,100 $1,500 Direct labor 800 6,000 900 500 At the end of March, Jobs 86, 87, and 89 were completed. Only Job 87 was sold. On March 1, the balance in Finished Goods was zero.

Answer and Explanation:

1. The computation of overhead rate based on direct labor cost is shown below:-

Overhead rate = Overhead applied × 100 ÷ Direct labor cost

= 888 × 100 ÷ 1,200

= 74%

2. The Preparation of job-order cost sheet for the four jobs is shown below:

Particulars                Job 86        Job 87        Job 88        Job 89

Beginning balance $6,888       $6,820

Direct materials       $3,000      $7,000         $2,100          $1,500

Direct labor              $800          $6,000        $900            $500

Applied overhead  

is 74% of direct labor $592           $4,440       $666            $370

Total                          $11,280       $24,260      $3,666      $2,370

3. The computation of ending balances of Work in Process and Finished Goods is shown below:-

Work in process of Job 88 = $3,666

Finished goods = Total of Job 86 + Total of Job 89

= $11,280 + $2,370

= $13,650

4. The computation of the Cost of Goods Sold for March is shown below:-

Cost of goods sold is

= Job 87

= $24,260

definitely a

answer; rapid growth in buyer demand and high buyer switching cost;