Job costing, unit cost, ending work in process. Rowan Company produces pipes for concert-quality organs. Each job is unique. In April 2016, it completed all outstanding orders, and then, in May 2016, it worked on only two jobs, M1 and M2: A B C 1 Rowan Company, May 2016 Job M1 Job M2 2 Direct materials $ 75,000 $ 56,000 3 Direct manufacturing labour 275,000 209,000 Direct manufacturing labour is paid at the rate of $25 per hour. Manufacturing overhead costs are allo- cated at a budgeted rate of $22 per direct manufacturing labour-hour. Only Job M1 was completed in May. Required: 1. Calculate the total cost for Job M1. 2. 1,600 pipes were produced for Job M1. Calculate the cost per pipe. 3. Prepare the journal entry transferring Job M1 to finished goods. 4. What is the ending balance in the Work-in-Process Control account?

1. The total cost for Job M1 is $592,000

2. Cost per unit is $370

3. Journal

Finished goods inventory592,000  

Work in process inventory                    592,000

4.  Ending balance in Work-in-Process Control account is $448,920

Explanation:

                                A                              B                          C

1)   Rowan Company, May 2016           Job M1              Job M2

2)  Direct materials                             $ 75,000             $ 56,000

3)  Direct manufacturing labour          275,000                209,000

Direct manufacturing labour is paid at the rate of $25 per hour

Manufacturing overhead costs are allocated at a budgeted rate of $22 per direct manufacturing labour-hour

1. Direct labor rate = $25 per hour

Direct labor hours used on Job M1 = Direct manufacturing labor ÷ Direct labor rate

= 275,000 ÷ 25

= $ 11,000

Manufacturing overhead applied to Job M1 = Direct labor hours used on Job M1 x 22

= $11,000 x 22

= $242,000

Job cost sheet (Job M1)

Direct material  = $75,000

Direct labor = $275,000

Overhead applied  = $242,000

Total cost = $592,000

2.  Cost per unit = Total cost ÷ Number of units

= 592,000 ÷ 1,600

= $370

3. Journal

Finished goods inventory592,000  

Work in process inventory                    592,000

4.  Direct labor hours used on Job M2 = Direct manufacturing labor/Direct labor rate

= 209,000 ÷ 25

= $8,360

Manufacturing overhead applied to Job M2 = Direct labor hours used on Job M2 x 22

= $8,360 x 22

= $183,920

Job cost sheet (Job M2)

Direct material  = $56,000

Direct labor  = $209,000

Overhead applied  = $183,920

Total cost  = $448,920

Ending balance in work in process control account = $448,920

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