Job Order Costing

# 221 b calculate the balance of the work in process

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221. (b) Calculate the balance of the Work in Process Inventory account at April 30. Solution 115 (10–15 min.) (a) April 30 Work in Process Inventory ............................................ 7,400 Manufacturing Overhead ............................................... 600 Raw Materials Inventory ....................................... 8,000 Work in Process Inventory ............................................ 9,500 Manufacturing Overhead ............................................... 400 Factory Labor ....................................................... 9,900 2- 1 9

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Test Bank for Managerial Accounting, Second Edition Solution 115 (cont.) Work in Process Inventory ............................................ 5,700 Manufacturing Overhead ...................................... 5,700 (\$9,500 × 60% = \$5,700) Finished Goods Inventory ............................................. 8,960 Work in Process Inventory ................................... 8,960 (\$3,600 + \$1,200 + \$2,600 + \$1,560 = \$8,960) (b) Work in Process Inventory, April 30 = \$21,240 Job No. 222 \$ 7,620 (\$4,000 + \$1,700 + \$1,200 + \$720) Job No. 223 7,040 (\$2,400 + \$2,900 + \$1,740) Job No. 224 6,580 (\$2,100 + \$2,800 + \$1,680) \$21,240 Ex. 116 Manufacturing cost data for Dolan Company, which uses a job order cost system, are presented below: Case A Case B Direct Materials Used (a) \$103,000 Direct Labor \$ 70,000 140,000 Manufacturing Overhead Applied 63,000 (d) Total Manufacturing Costs 240,000 (e) Work in Process, 1/1/02 (b) 45,000 Total Cost of Work in Process 300,000 (f) Work in Process, 12/31/02 (c) 40,000 Cost of Goods Manufactured 205,000 (g) Instructions Indicate the missing amount for each letter. Assume that overhead is applied on the basis of direct labor cost and that the rate is the same for both cases. Solution 116 (9–12 min.) Case A (a) + \$70,000 + \$63,000 = \$240,000 (a) = \$107,000 \$240,000 + (b) = \$300,000 (b) = \$60,000 \$300,000 – (c) = \$205,000 (c) = \$95,000 2- 2 0
Job Order Cost Accounting Solution 116 (cont.) Case B [Note that the overhead rate from Case A is 90% (\$63,000 ÷ \$70,000)] \$140,000 × 90% = (d) (d) = \$126,000 \$103,000 + \$140,000 + \$126,000 = (e) (e) = \$369,000 \$369,000 + \$45,000 = (f) (f) = \$414,000 \$414,000 – \$40,000 = (g) (g) = \$374,000 Ex. 117 Gray Corporation had the following transactions during its first month of operations: 1. Purchased raw materials on account, \$85,000. 2. Raw materials of \$30,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that \$6,000 was classified as indirect materials. 3. Factory labor costs incurred were \$95,000 of which \$84,000 pertained to factory wages payable and \$11,000 pertained to employer payroll taxes payable. 4. Time tickets indicated that \$80,000 was direct labor and \$15,000 was indirect labor. 5. Overhead costs incurred on account were \$96,000. 6. Manufacturing overhead was applied at the rate of 150% of direct labor cost. 7. Goods costing \$115,000 are still incomplete at the end of the month; the other goods were completed and transferred to finished goods. 8. Finished goods costing \$90,000 to manufacture were sold on account for \$120,000. Instructions Journalize the above transactions for Gray Corporation. Solution 117 (12–17 min.) 1. Raw Materials Inventory ................................................................. 85,000 Accounts Payable .................................................................. 85,000 2. Work in Process Inventory .............................................................. 24,000 Manufacturing Overhead ................................................................ 6,000 Raw Materials Inventory ........................................................ 30,000 3. Factory Labor ................................................................................. 95,000 Factory Wages Payable ......................................................... 84,000 Payroll Taxes Payable ........................................................... 11,000 2- 2 1

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Test Bank for Managerial Accounting, Second Edition Solution 117 (cont.) 4. Work in Process Inventory .............................................................. 80,000 Manufacturing Overhead ................................................................ 15,000 Factory Labor ........................................................................ 95,000 5. Manufacturing Overhead ................................................................ 96,000 Accounts Payable .................................................................. 96,000 6. Work in Process Inventory .............................................................. 120,000 Manufacturing Overhead ....................................................... 120,000 (\$80,000 × 150% = \$120,000) 7. Finished Goods Inventory ............................................................... 109,000 Work in Process Inventory ..................................................... 109,000 (\$24,000 + \$80,000 + \$120,000 = \$224,000) (\$224,000 – \$115,000 = \$109,000) 8. Accounts Receivable ...................................................................... 120,000 Sales ..................................................................................... 120,000 Cost of Goods Sold ........................................................................ 90,000 Finished Goods Inventory ...................................................... 90,000 Ex. 118 Watson Manufacturing Company employs a job order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations: 1. Direct materials requisitioned during the month: Job 101 \$22,000 Job 102
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