# In January, Reyes Tool & Dye requisitions raw materials for production as follows: Job 1 \$960, Job 2 \$1,630, Job

3 \$720, and general factory use \$680. During January, time tickets show that the factory labor of \$6,100 was used as follows: Job 1 \$1,570, Job 2 \$1,940 Job 3 \$1,670, and general factory use \$920. Prepare the job cost sheets for each of the three jobs. (If answer is zero, please enter 0, do not leave any fields blank.) Job 1 Date 1/31 1/31 Direct Materials 960 0 Job 2 Date 1/31 1/31 Direct Materials 1630 0 Job 3 Date 1/31 1/31 Direct Materials 720 0 0 1670 Direct Labor 0 1,940 Direct Labor 0 1570 Direct Labor

In March, Hollaway Company completes Jobs 10 and 11. Job 10 cost \$28,110 and Job 11 \$32,630. On March 31, Job 10 is sold to the customer for \$38,110 in cash. Journalize the entries for the completion of the two jobs and the sale of Job 10. Date Mar. 31 Account/Description Finished goods inventory Work in process inventory (To record completion of jobs.) Mar. 31 Cash 38,110 60740 60740 Debit Credit

Sales (To record sale of job.) Mar. 31 Cost of goods sold Finished goods inventory (To record cost of job.) 28110

38,110

28110

(a) + \$50,000 + \$42,500 = \$155,650 (a) = \$63,150 \$155,650 + (b) = \$201,500 (b) = \$45,850 \$201,500 - (c) = \$192,300 (c) = \$9,200 [Note: The instructions indicate that manufacturing overhead is applied on the basis of direct labor cost, and the rate is the same in all cases. From Case A, a student should note the overhead rate to be 85%, or (\$42,500 ÷ \$50,000).] (d) = .85 × \$120,000 (d) = \$102,000 \$83,000 + \$120,000 + \$102,000 = (e) (e) =\$305,000 \$305,000 + \$15,500 = (f) (f) = \$320,500 \$320,500 - \$11,800 = (g) (g) = \$308,700 [Note: (h) and (i) are solved together.] (i) = .85(h) \$63,150 + (h) + .85(h) = \$213,000 1.85(h) = \$149,850 (h) = \$81,000 (i) = \$68,850 (j) = \$213,000 + \$18,000 (j) = \$231,000 \$231,000 - (k) = \$222,000 (k) = \$9,000 Manufacturing cost data for Pena Company, which uses a job order cost system, are presented below. Indicate the missing amount for each letter. Assume that in all cases manufacturing overhead is applied on the basis of direct labor cost and the rate is the same. Case A Case B Case C Direct materials used Direct labor Manufacturing overhead applied Total manufacturing costs a \$63,150 50,000 42,500 155,650 \$ 83,000 120,000 d 102,000 e 305,000 \$ 63,150 h 81,000 i 68,850 213,000

Work in process 1/1/10 Total cost of work in process Work in process 12/31/10 Cost of goods manufactured

b 45,850 201,500 c 9,200 192,300

15,500 f 320,500 11,800 g 308,700

18,000 j 231,000 k 9,000 222,000

Easy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year. Budgeted overhead Actual overhead Budgeted decorator hours Actual decorator hours The company uses Operating Overhead in place of Manufacturing Overhead. \$1,000,000 \$779,550 40,000 30,750

Correct.

Compute the predetermined overhead rate. \$ 25

Correct.

Prepare the entry to apply the overhead for the year.

Account/Description Work in process Operating overhead 768750

Debit

Credit

768750

Correct.

Determine whether the overhead was under- or overapplied and by how much. \$ 10800 Underapplied

P15-2A

For the year ended December 31, 2010, the job cost sheets of DeVoe Company contained the following data. Job Number Explanation 7640 Balance 1/1 Direct Materials \$25,000 Direct Labor \$24,000 Manufacturing Overhead \$28,800 Total Costs \$77,800

7641

7642 Other data: 1. Raw materials inventory totaled \$15,000 on January 1. During the year, \$140,000 of raw materials were purchased on account. 2. Finished goods on January 1 consisted of Job No. 7638 for \$87,000 and Job No. 7639 for \$92,000. 3. Job No. 7640 and Job No. 7641 were completed during the year. 4. Job Nos. 7638, 7639, and 7641 were sold on account for \$530,000. 5. Manufacturing overhead incurred on account totaled \$120,000. 6. Other manufacturing overhead consisted of indirect materials \$14,000, indirect labor \$20,000, and depreciation on factory machinery \$8,000.

Current year's costs Balance 1/1 Current year's costs Current year's costs

30,000 11,000 43,000 48,000

36,000 18,000 48,000 55,000

43,200 21,600 57,600 66,000

109,200 50,600 148,600 169,000

Correct.

Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. Hint: Use a single T account for Work in Process Inventory. Calculate each of the following, then post each to the T account: (1) beginning balance, (2) direct materials, (3) direct labor, (4) manufacturing overhead, and (5) completed jobs. Work in Process Inventory 1/1 Balance 128400 Completed Work Direct materials 121000 386200

Direct labor

139000

12/31 Balance

169000

Work in process balance

\$ 169000

Unfinished job No. 7642

\$ 169000

Account/Description Manufacturing overhead Cost of goods sold Actual overhead costs Incurred on account Indirect materials Indirect labor Depreciation \$120,000 14,000 20,000 8,000 \$162,000 Applied overhead costs Job 7640 Job 7641 Job 7642 \$43,200 57,600 66,000 \$166,800 \$162,000 166,800 \$4,800

Debit 4,800

Credit

4,800

Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold. Account/Description Manufacturing overhead Debit 4,800 Credit

Cost of goods sold

4,800

Determine the gross profit to be reported for 2010. (List job numbers in ascending order of job number.) Sales Cost of goods sold Add: Job 7638 Job 7639 Job 7641 Less: Overapplied overhead Gross profit \$87,000 92,000 199,200 378,200 4,800 373,400 \$156,600 \$530,000

When raw materials are purchased, the Work in Process Inventory account is debited. False True

Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period. False True

Process costing is not used when similar goods are being produced. jobs have distinguishing characteristics. large volumes are produced. a series of connected manufacturing processes is necessary.

When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is Finished Goods Inventory

Work In Process Inventory Finished Goods Inventory Direct Materials Direct Labor Manufacturing Overhead Work In Process Inventory Direct Materials Direct Labor Manufacturing Overhead Raw Materials Inventory Work In Process Inventory

A materials requisition slip showed that direct materials requested were \$53,000 and indirect materials requested were \$9,000. The entry to record the transfer of materials from the storeroom is

c d a b

Sportly, Inc. completed Job No. B14 during 2008. The job cost sheet listed the following:

Direct materials Direct labor Manufacturing overhead applied Units produced Units sold How much is the cost of the finished goods on hand from this job? \$30,600 \$63,000 \$37,800 \$25,200 When the company assigns factory labor costs to jobs, the direct labor cost is debited to Factory Labor. Work in Process Inventory. Direct Labor. Manufacturing Overhead.

\$33,000 \$18,000 \$12,000 3,000 units 1,800 units

In March, Hollaway Company completes Jobs 10 and 11. Job 10 cost \$30,410 and Job 11 \$32,310. On March 31, Job 10 is sold to the customer for \$40,410 in cash. Journalize the entries for the completion of the two jobs and the sale of Job 10. Date Mar. 31 Account/Description Finished goods inventory Work in process inventory (To record completion of jobs.) Mar. 31 Cash Sales (To record sale of job.) 40,410 40,410 62720 62720 Debit Credit

Mar. 31

Cost of goods sold Finished goods inventory (To record cost of job.)

30,410 30,410

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