16000 job 103 24000 62000 2 direct labor incurred and

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16,000 Job 103 24,000 $62,000 2. Direct labor incurred and charged to jobs during the month was: Job 101 $30,000 Job 102 26,000 Job 103 20,000 $76,000 3. Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 75% of direct labor costs. 4. Actual manufacturing overhead costs incurred during the month amounted to $66,000. 5. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed during the month. 2- 2 2
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Job Order Cost Accounting Ex. 118 (cont.) Instructions (a) Prepare journal entries to record the above transactions. (b) Answer the following: 1. How much manufacturing overhead was applied to Job 103 during the month? 2. Compute the unit cost of Jobs 101 and 103. 3. What is the balance in Work In Process Inventory at the end of the month? 4. Determine if manufacturing overhead was under- or overapplied during the month. How much? Solution 118 (15–20 min.) (a) 1. Work in Process Inventory ...................................................... 62,000 Raw Materials Inventory ................................................. 62,000 2. Work in Process Inventory ...................................................... 76,000 Factory Labor ................................................................. 76,000 3. Work in Process Inventory ...................................................... 57,000 Manufacturing Overhead ................................................ 57,000 4. Manufacturing Overhead ......................................................... 66,000 Cash, Payables, etc. ....................................................... 66,000 5. Finished Goods Inventory ....................................................... 133,500 Work in Process Inventory .............................................. 133,500 [Job 101 $74,500; Job 103 $59,000—see (b) 2] (b) 1. $15,000 ($20,000 × 75%). 2. Unit cost: Job 101, $74.50; Job 103, $295.00. Job 101 Job 103 Direct materials $22,000 $24,000 Direct labor 30,000 20,000 Overhead applied 22,500 15,000 Total cost 74,500 59,000 Units ÷ 1,000 ÷ 200 Unit cost $74.50 $295 3. Work In Process Inventory is $61,500 and consists of work performed on Job 102. Job 102 Direct materials $16,000 Direct labor 26,000 Overhead applied 19,500 Total cost $61,500 4. Manufacturing overhead costs were underapplied by $9,000 during the month. Actual manufacturing overhead $66,000 Manufacturing overhead applied 57,000 Underapplied overhead $ 9,000 2- 2 3
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Test Bank for Managerial Accounting, Second Edition Ex. 119 The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2002: Beginning Ending Inventories: Raw materials $17,000 $19,000 Work in process 9,000 14,000 Finished goods 11,000 8,000 Total $37,000 $41,000 In addition, the following transactions occurred in 2002: 1. Raw materials purchased on account, $75,000. 2. Incurred factory labor, $80,000, all is direct labor. (Credit Factory Wages Payable). 3. Incurred the following overhead costs during the year: Utilities $6,800, Depreciation on manufacturing machinery $8,000, Manufacturing machinery repairs $6,200, Factory insurance $9,000 (Credit Accounts Payable and Accumulated Depreciation). 4. Assigned $80,000 of factory labor to jobs. 5. Applied $32,000 of overhead to jobs. Instructions (a) Journalize the above transactions. (b) Reproduce the manufacturing cost and inventory accounts. Use T-accounts. (c) From an analysis of the accounts, compute the following: 1. Raw materials used. 2. Completed jobs transferred to finished goods. 3. Cost of goods sold. 4. Under- or overapplied overhead. Solution 119 (16–22 min.) (a) 1. Raw Materials Inventory .......................................................... 75,000 Accounts Payable ........................................................... 75,000 2. Factory Labor .......................................................................... 80,000 Factory Wages Payable ................................................. 80,000 3. Manufacturing Overhead ......................................................... 30,000 Accounts Payable ........................................................... 22,000 Accumulated Depreciation .............................................. 8,000 4. Work in Process Inventory ...................................................... 80,000 Factory Labor ................................................................. 80,000 5. Work in Process Inventory ...................................................... 32,000 Manufacturing Overhead ................................................ 32,000 (b) Raw Materials Inventory Work in Process Inventory Bal. 17,000 Bal. 9,000 (1) 75,000 (4) 80,000 Bal. 19,000 (5) 32,000 Bal. 14,000 2- 2 4
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Job Order Cost Accounting Solution 119 (cont.) Finished Goods Inventory
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