Question: Liliana Richmond started KidCo Inc in Albuquerque New Mexico to

Liliana Richmond started KidCo, Inc. in Albuquerque, New Mexico to produce affordable children’s furnishings. The company uses a job-order costing system. KidCo’s work-in-process inventory at the end of November consisted of the following jobs.

The company’s November 30 finished-goods inventory, which is valued using the FIFO (first-in, first-out) method, consisted of five items.

KidCo applies manufacturing overhead on the basis of direct-labor hours. The company’s overhead budget for the year totals $4,500,000. The company plans to use 600,000 direct-labor hours during this period, which is the firm’s estimated practical capacity. Through the first 11 months of the year, a total of 555,000 direct-labor hours were worked, and total overhead amounted to $4,273,500.
At the end of November, the balance in KidCo’s Raw-Material Inventory account, which includes both raw material and purchased parts, was $668,000. Additions to inventory and requisitions from inventory during December included the following.

During December, KidCo’s factory payroll consisted of the following:

The following list shows the jobs that were completed and the unit sales for December.

1. Explain when it is appropriate for a company to use a job-order costing system.
2. Calculate the dollar balance in KidCo’s Work-in-Process Inventory account as of December 31.
3. Calculate the dollar amount related to the playpens in KidCo’s Finished-Goods Inventory account as of December 31.

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  • CreatedApril 22, 2014
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