Exercise 15-3 A job order cost sheet for Ryan Company is shown below. ob No. 92

Question

Exercise 15-3

A job order cost sheet for Ryan Company is shown below.

ob No. 92 For 2,000 Units Direct Direct Manufacturing Materials Labor Beg bal 5,000 6,000 4,200 6,000 12 25 27 8,000 6,400 2,000 4,000 13,000 18,000 3,200 13,800 Cost of completed job: $13,000 18,000 Manufacturing overhead 13,800 $44,800 $22.40 Direct materials Direct labor Total cost Unit cost ($44,800 2,000) (a) On the basis of the foregoing data, answer the following questions. (1) What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job? Balance in Work in Process Inventory on January 1 (2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (Round answers to 0 decimal places, eg. 55%.) Last year Current year Overhead rate (b) Prepare summary entries at January 31 to record the current year's transactions pertaining to Job No. 92. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 31 Debit Credit (To record raw materials used) 31 To record factory labor used) 31 To record manufacturing overhead) 31 To record job completed)

Explanation / Answer

1) Balance in work in process inventory on january 1 = 5000+6000+4200 = $15200

2) Overhead rate :

c) Journal entry :

Last year Current year Overhead rate 4200*100/6000 = 70% of direct labour cost 6400*100/8000 = 80% of direct labour cost

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