13 again referring to the preceding example first

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Unformatted text preview: eceding example: First close Overhead Applied to Overhead Control Overhead Applied/Allocated 9,600 Overhead Control 12,000 9,600 9,600 2,400 0 2,400 Then, close the overhead Control to Cost of Goods Sold Cost of Goods Sold 2,400 14 A Comprehensive Illustration of Job Costing A firm started two Jobs, A and B, during the period. The following direct costs were traced to each: Job A Job B Direct Materials $525 $300 Direct Labor $600 $500 The firm uses a normal costing system with one cost pool to account for all overhead costs. Overhead costs are allocated to a job using machine hours as the base. Budgeted Total Overhead incurred Allocation Base (Machine Hrs) Machine Hours – Job A – Job B Actual $1,000 10 $1,200 10.5 1 9 1.0 9.5 At the end of the period, Job A was completed and delivered to the customer, Job B, remained, to be completed and delivered during the following period. 16 1) Give the journal entries to record the actual costs: Debit Credit To record direct materials costs: WIP - Job A WIP - Job B Direct Materials 525 300 825 To record direct labor costs: WIP - Job A WIP - Job B Wages payable 600 500 1,100 To record actual overhead costs: Overhead Control Applicable Accts (salary payable, accum depr) 1,200 1,200 17 2a) Compute the firm’s overhead allocation rate. Budgeted overhead allocation = budgeted overhead costs / budgeted allocation base = 1,000 / 10 = $100 / hr 2b) Give the journal entries to allocate overhead costs to the jobs. Debit Credit To allocate overhead costs to Job A: WIP Overhead Applied 100 X 1 = 100 100 To allocate overhead costs to Job B: WIP Overhead Applied 100 X 9.5 = 950 950 18 3) Post the entries to the firm’s accounts, given below: Work-in-Process – Job A Work-in-Process – Job B 525 600 100 300 500 950 1,225 1,750 Overhead Control 1,200 1,200 Overhead Applied 100 950 1,050 19 4) Give the journal entry to record the completion and shipment of Job A to the customer: Debit Credit To record the completion of Job A: Finished Goods - Job A WIP - Job A 1,225 COGS Finished Goods 1,225 1,225 1,225 To record the shipment of Job A: job B Finished Goods - Job B WIP - Job B 1,750 1,750 20 5) Give the journal entry(s) to close the overhead applie...
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This document was uploaded on 01/24/2014.

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