Rafael Company produces pipes for concert-quality organs. Each job is unique. In April 2013, it completed all outstanding orders, and then, in May 2013, it worked on only two jobs, M1 and M2:Job M1: Direct materials $78,000, Direct manufacturing labor $273,000Job M2: Direct materials $51,000, Direct manufacturing labor $208,000Direct manufacturing labor is paid at the rate of $26 per hour. Manufacturing overhead costs are allocated at a budgeted rate of $20 per direct manufacturing labor-hour. Only Job M1 was completed in May. Requirements:A) Calculate the total cost for Job M1.B) 1,100 pipes were produced for Job M1. Calculate the cost per pipe. C) Prepare the journal entry transferring Job M1 to finished goods. D) What is the ending balance in the Work-in-Process Control account?

Answer and Explanation:

The computation is shown below:-

A. the total cost for Job M1

Labor hour used in Job M1 = Direct manufacturing labor ÷ Direct manufacturing labor per hour

= $273,000 ÷ $26

= 10,500

Manufacturing overhead costs of Job M1 = Labor hour used in Job M1 × Predetermined overhead rate

= 10,500 × $20

= $210,000

Total cost for Job M1 = Direct materials + Direct manufacturing labor + Manufacturing overhead costs

= $78,000 + $273,000 + $210,000

= $561,000

B. the cost per pipe

Cost per pipe = Total cost for Job M1 ÷ No of unit produced

= $561,000 ÷ 1,100

= $510

C. The Journal entry is shown below:-

Finished Goods Dr, $561,000

            To Work in Process $561,000

(Being the transfer is recorded)

D. Ending balance in the Work-in-Process Control account

Labor hour used in Job M2 = Direct manufacturing labor ÷ Direct manufacturing labor per hour

= $208,000 ÷ $26

= 8,000

Manufacturing overhead costs of Job M2 = Labor hour used in Job M2 × Predetermined overhead rate

= 8,000 × $20

= $160,000

Ending balance in the Work-in-Process Control account = Direct materials of Job M2 + Direct manufacturing labor of Job M2 + Manufacturing overhead costs of Job M2

= $51,000 + $208,000 + $160,000

= $419,000

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