Calculate the production costs incurred in may

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Reference no: EM132775118

Problem 1: Calculate the production costs incurred in May for each of the three jobs.

Farm Equipment, Inc., produces tractors and other farm machinery. Each piece of equipment is built to customer specifications. During May, its first month of operations, Farm Equipment, Inc., began working on three customer orders: jobs 1, 2, and 3.

The following transactions occurred during May:

Purchased production materials on account totaling $450,000

Processed material requisitions for the following items:

Job 1 direct materials $77,600
Job 2 direct materials $38,600
Job 3 direct materials $45,000
Indirect materials $87,000

Processed timesheets showing the following:

Job 1 direct labor hours (700 hours) $14,800
Job 2 direct labor hours (550 hours) $11,800
Job 3 direct labor hours (300 hours) $ 6,500
Indirect labor $ 9,700

  • Applied overhead using a predetermined rate of 160 percent of direct labor cost
  • Completed job 1 and transferred it to finished goods
  • Delivered job 1 to the customer and billed her $140,000. (Hint: Two entries are required-one for the cost of the goods and another for the revenue.)

Reference no: EM132775118

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