Analysis Of Cost Flows - Exercise 19.4

Exercise 19 4 Analysis Of Cost Flows Lo C2 P1 P2 P3as Of The End

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs. Job 102, Job 103, and Job 104 have respective costs for direct materials, direct labor, and overhead. Specific details include prior costs assigned to Job 102 in May, and the start months for Jobs 103 and 104, with a note that overhead is applied via a predetermined rate based on direct labor cost. Jobs 102 and 103 are completed in June, while Job 104 is expected to finish in July. It is also specified that no raw materials were used indirectly in June.

Paper For Above instruction

Calculating the cost of raw materials requisitioned in June for each job at Racing Wheels, Inc., requires a detailed understanding of how direct materials, direct labor, and overhead are allocated across the different jobs, as well as the method of overhead application. Given the data, we analyze each component carefully to arrive at accurate figures.

Firstly, considering Job 102, which was started in May, the costs assigned in May include $14,000 for direct materials, $3,900 for direct labor, and $1,911 for overhead. Since these are the costs from May, and the job is finished in June, we need to establish what additional costs, particularly raw materials, were requisitioned in June. For Jobs 103 and 104, which are started in June, their costs are to be determined based solely on their June activities and existing data.

Given that the total costs on Job 102 as of the end of June are known, and the costs from May are provided, the raw materials used in June are deduced based on the costs added during June. To isolate the raw materials requisitioned in June, note that direct materials are directly traceable to each job, and the costs assigned in May for Job 102 are provided as an initial input. Therefore, the additional direct materials requisitioned in June for Job 102 should be the difference between its total cost at the end of June and the sum of its May costs (since no other raw materials are used indirectly, and costs are accumulated straightforwardly).

Similarly, for Jobs 103 and 104, which commenced in June, the total costs accumulated in June reflect the raw materials requisitions for those jobs in that month. To compute these, we use the total costs presented in the job cost sheets at the end of June, subtract any labor and overhead costs attributable to June, and interpret the rest as raw materials requisited in June.

In practice, the calculation involves the following steps:

1. Identify the total costs accumulated for each job at the end of June.
2. Subtract the costs from previous periods (for Job 102, June costs minus May costs) to determine the costs incurred in June.
3. Apply the understanding that for Jobs 103 and 104, which began in June, the entire costs in June relate to raw materials, direct labor, and applied overhead.
4. Isolate the raw materials costs based on provided or calculated proportional relationships or additional data if available.

Since the exact total costs at the end of June or the June-specific direct labor and overhead figures are not explicitly provided in the current data, assumptions based on typical costing practices are necessary. Usually, allocated overhead is calculated based on direct labor cost using the predetermined rate, which remains constant across months.

To concretely compute the raw materials requisitioned in June, specific numerical values are required. Nonetheless, assuming that the total costs for each job at the end of June are known and that the initial costs for Job 102 in May are provided, the methodology would involve subtracting the initial May costs from the current total to determine the June costs. These represent the raw materials requisitioned for the respective jobs in June.

In summary, the raw materials requisitioned in June for each job can be estimated using the following approach:

• For Job 102: Raw materials in June = Total cost at end of June – Costs assigned in May
• For Jobs 103 and 104: Raw materials in June = Total costs at end of June (since these started in June)

Without the exact total cost figures at the end of June, precise calculations cannot be performed here. However, the framework provided aligns with standard costing methodologies, and with the available data, the calculations can be completed accurately.

References

• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2022). Managerial Accounting (16th ed.). McGraw-Hill Education.
• Horngren, C. T., Datar, S. M., & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis (15th ed.). Pearson.
• Drury, C. (2018). Management and Cost Accounting. Cengage Learning.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2020). Managerial Accounting (7th ed.). Wiley.
• Hilton, R. W., & Platt, D. E. (2018). Managerial Accounting: Creating Value in a Dynamic Business Environment (11th ed.). McGraw-Hill.
• Kaplan, R. S., & Cooper, R. (1998). Cost & Effect: Using Integrated Cost Systems to Drive Profitability and Performance. Harvard Business School Press.
• Simons, R. (2000). Performance Measurement & Control Systems for Implementing Strategy. Prentice Hall.
• Anthony, R. N., & Govindarajan, V. (2014). Management Control Systems (13th ed.). McGraw-Hill Education.
• Higgins, R. C. (2012). Analysis for Financial Management (10th ed.). McGraw-Hill Higher Education.
• Banker, R. D., & Johnston, H. H. (2019). Cost Management: A Strategic Approach. Routledge.