Uvw1235125

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  • Topic: Business school, Darden Graduate School of Business Administration, University of Virginia
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  • Published : September 25, 2012
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UVA-C-2196
Lambeth Custom Cabinets (A)
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UVA-C-2196

LAMBETH CUSTOM CABINETS (A) Jack Lambeth, a master cabinetmaker, owned and operated a shop where he sold custommade cabinets. At the beginning of September, he had no outstanding debts, and the following amounts were on his books: 1. Raw-materials inventory, $2,150 2. Supplies inventory, $620 3. Work-in-process inventory, $5,650

Job A-3 A-4 A-5 Total

Materials $ 750 900 325 $1,975

Labor $1,100 650 700 $2,450

Overhead (50% of labor) $ 550 325 350 $1,225

$5,650

4. All other assets as of September 1, $16,890 During the month, Lambeth’s woodworking crew finished jobs A-3, A-4, and A-6, but did not finish A-5. Job A-7 was started but not finished during September. Overhead costs (pertaining primarily to equipment and shop depreciation, cleaning supplies, and insurance) were applied to every job at the end of the month unless the job was finished during the month, in which case overhead was applied when the job was finished.

This case was prepared by Professor Francis J. Spreng of McKendree College, with minor revisions by Professor Mark Haskins of the Darden Graduate School of Business Administration, University of Virginia. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2004 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies ,send an e-mail to sales@dardenpublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means— electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. ◊

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UVA-C-2196

During September, the following direct-materials and direct-labor costs were incurred: Job A-3 A-4 A-5 A-6 A-7 Direct Materials $ 280 350 180 375 590 $1,175 Direct Labor $ 750 1,300 550 490 370 $3,460

Other important financial factors in September were as follows: 1. Raw materials costing $1,675 were purchased during the month. 2. Supplies costing $580 were purchased, of which $490 were used and thus transferred to the manufacturing-overhead account. 3. Total increases to the labor-general-ledger account were $5,460 (apparently, $2,000 of indirect-labor costs were charged). 4. General and administrative expenses for the month were $3,420. 5. Collections received from customers on jobs A-3, A-4, and A-6 amounted to $6,125, $8,600, and $1,750, respectively, for a total of $16,475. 6. At the end of the month, Lambeth Custom Cabinets had no...
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