PPE Inc. manufactures highly specialized, custom protective personal equipment for hospitals and research labs. Due to chronic product shortages, orders are incomplete. PPE is concerned about maintaining a competitive profit margin while also maintaining the highest quality standards.
The following are the job cost sheets for their custom face shields, reflecting work in January and so far in February:
Required:
a. What MOH budgeted rate is PPE using to apply MOH costs to their jobs? (Hint: Their allocation base is direct labor cost).
b. Based on the job cost sheet information, what is the total cost of direct materials requisitioned in January?
c. What is the total amount of direct labor cost, direct material cost and MOH cost incurred during the month of January?
d. Assuming there was no beginning WIP Inventory balance in January, what is the ending WIP Inventory balance as of January 31?
e. What is PPE's Cost of Goods sold in January? February? Assume that in both months total actual MOH equaled total applied MOH.
f. What is PPE's current WIP Inventory balance as of 2/6/24?
Is PPE pricing custom items by using a steady mark-up based on product cost? Provide evidence to support your answer. What would need to be done differently if PPE wanted to use a steady mark-up percentage based on costs.

Question

PPE Inc. manufactures highly specialized, custom protective personal equipment for hospitals and research labs. Due to chronic product shortages, orders are incomplete. PPE is concerned about maintaining a competitive profit margin while also maintaining the highest quality standards.
The following are the job cost sheets for their custom face shields, reflecting work in January and so far in February:
   Required:
a. What MOH budgeted rate is PPE using to apply MOH costs to their jobs? (Hint: Their allocation base is direct labor cost).
b. Based on the job cost sheet information, what is the total cost of direct materials requisitioned in January?
c. What is the total amount of direct labor cost, direct material cost and MOH cost incurred during the month of January?
d. Assuming there was no beginning WIP Inventory balance in January, what is the ending WIP Inventory balance as of January 31?
e. What is PPE's Cost of Goods sold in January? February? Assume that in both months total actual MOH equaled total applied MOH.
f. What is PPE's current WIP Inventory balance as of 2/6/24?
Is PPE pricing custom items by using a steady mark-up based on product cost? Provide evidence to support your answer. What would need to be done differently if PPE wanted to use a steady mark-up percentage based on costs.

Quizplus · Accepted Answer

The Answer of PPE Inc. manufactures highly specialized, custom protective personal equipment for hospitals and research labs. Due to chronic product shortages, orders are incomplete. PPE is concerned about maintaining a competitive profit margin while also maintaining the highest quality standards.
The following are the job cost sheets for their custom face shields, reflecting work in January and so far in February:
   Required:
a. What MOH budgeted rate is PPE using to apply MOH costs to their jobs? (Hint: Their allocation base is direct labor cost).
b. Based on the job cost sheet information, what is the total cost of direct materials requisitioned in January?
c. What is the total amount of direct labor cost, direct material cost and MOH cost incurred during the month of January?
d. Assuming there was no beginning WIP Inventory balance in January, what is the ending WIP Inventory balance as of January 31?
e. What is PPE's Cost of Goods sold in January? February? Assume that in both months total actual MOH equaled total applied MOH.
f. What is PPE's current WIP Inventory balance as of 2/6/24?
Is PPE pricing custom items by using a steady mark-up based on product cost? Provide evidence to support your answer. What would need to be done differently if PPE wanted to use a steady mark-up percentage based on costs.

PPE Inc Manufactures Highly Specialized, Custom Protective Personal Equipment for Hospitals