Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

HANDOUT 2 CHAPTER4 JOB COSTING Job costing, journal entries. At the end of 2017

ID: 2340588 • Letter: H

Question

HANDOUT 2 CHAPTER4 JOB COSTING Job costing, journal entries. At the end of 2017 Peerless Manufacturing Company's accountant estimated that the company will incur total manufacturing ove work 20,000 hours in 2018. The factory uses direct labor hours as its cost allocation base. The company's tax rate is 20%. Required: 1. Calculate the budgeted manufacturing overhead rate (predetermined factory overhead rate) for 2018 rhead costs of $120,000 and its assembly line workers will 2. Prepare Journal entries for the following transactions and post to T-accounts in the general ledger. a). 08/07/2018 Purchased on credit 3,100 pounds of raw materials at S10 per pound. b). 08/11/2018 Raw materials requisitioned and issued to production: 1,650 pounds for Job #8 at S10 per pound 1,225 pounds for Job #9 at $10 per pound c). 08/15/2018 worked l ,020 direct labor hours on Job #8 at a rate of S14 per hour, and 400 hours on d) 08/16/2018 e). 08/16/2018 f). 08/17/2018 Job #9 at a rate of $12 per direct labor hour. Calculate the factory overhead to be allocated to Jobs #8 and #9 in August. Prepare the journal entry to allocate factory overhead to Jobs #8 and #9. The company completed Job #8 for 820 units. Determine the total and unit cost of this job. words l Type here to search

Explanation / Answer

Date format is DD-MM-YY.

Peerless manufacturing Company

Individual Job sheet

Job

Job 8

Job 9

Total

Beginning Work in progress

Direct material

0

Direct labor

0

Applied overhead

0

Beginning work in progress

0

0

0

During period

Direct material

16500

12250

28750

Direct labor

14280

4800

19080

Applied overhead

6120

2400

8520

Total cost added during period

36900

19450

56350

Total cost

36900

19450

56350

Unit cost (36900/820)

$    45.00

Status

Finished goods (sold)

In progress

Cost included in

Cost of goods sold

Work in progress inventory

Peerless manufacturing Company

Journal entries

Date

Account title

Debit

Credit

07-08-18

Raw material inventory (3100*10)

31000

Account payable

31000

(To record Purchase of raw material inventory

11-08-18

Work in progress inventory (1650*10= 16500) (1225*10=12250) (16500+12250)

28750

Raw material inventory

28750

(To record Issue of raw material inventory into production process.)

15-08-18

Work in progress inventory (1020*14 =14280 ) (400*12 =4800) (14280+4800)

19080

Cash

19080

(To record direct labor Consumed.)

16-08-18

Work in progress inventory (1020*6=6120) (400*6=2400) (6120+2400)

8520

Manufacture overhead

8520

(To record Manufacture overhead Applied to Job.)

18-08-18

Finished goods inventory

36900

Work in progress inventory

36900

(To record completion of Finished goods inventory.)

20-08-18

Cost of goods sold

36900

Finished goods inventory

36900

(To record Finished goods Inventory.)

20-08-18

Account receivable (820*85)

69700

Sales Revenue

69700

(To record sales revenue.)

28-08-18

Manufacture overhead (550+5650+1000)

7200

Cash

7200

(To record Manufacture Overhead paid.)

28-08-18

Manufacture overhead

2000

Accumulated depreciation -equipment

2000

(To Depreciation on factory equipment.)

30-08-18

Salaries expense

3500

Office supplies expense

200

Wages payable

3500

Account payable

200

(To record salaries expense and wages expense.)

30-08-18

Depreciation expense

1000

Accumulated depreciation -equipment

1000

(To Depreciation on office equipment.)

31-08-18

Manufacture overhead

        1,320

Cost of goods sold

1320

(To record over applied of manufacture overhead.)

31-08-18

Interest expense

50

Interest payable

50

(To record accrue interest.)

.

Estimated manufacturing overhead

120000

Direct labor hours

20000

Overhead applied rate per labor hour (120000/20000)

$       6.00

Actual Manufacture overhead incurred (550+5650+1000+2000)

7200

Less: Manufacture overhead Applied

8520

Under (Over) applied of overhead

     (1,320)

Do not use minus sign

Peerless manufacturing Company

Schedule of Cost of goods manufactured

Direct material

28750

Direct labor

19080

Applied overhead

8520

Total manufacturing cost

56350

Add: beginning work in progress

0

Total cost of work in progress

56350

Less: ending work in progress (Job 9)

19450

Cost of goods manufactured

36900

Peerless manufacturing Company

Schedule of Cost of goods Sold

Cost of goods manufactured

36900

Add: Beginning Finished goods Inventory

0

Inventory available for sale

36900

Less: ending Finished goods Inventory

0

Cost of goods Sold

36900

Less: (Over) applied of overhead

     (1,320)

Adjusted Cost of goods Sold

35580

Peerless manufacturing Company

Income statements

Sales revenue

69700

Less: cost of goods sold (adjusted)

35580

Gross margin

34120

Less: operating expense

Salaries expense

3500

Office supplies expense

200

Depreciation expense

1000

Total operating expense

4700

Operating profit

29420

Less: interest expense

50

Net income

29370

Date format is DD-MM-YY.

Peerless manufacturing Company

Individual Job sheet

Job

Job 8

Job 9

Total

Beginning Work in progress

Direct material

0

Direct labor

0

Applied overhead

0

Beginning work in progress

0

0

0

During period

Direct material

16500

12250

28750

Direct labor

14280

4800

19080

Applied overhead

6120

2400

8520

Total cost added during period

36900

19450

56350

Total cost

36900

19450

56350

Unit cost (36900/820)

$    45.00

Status

Finished goods (sold)

In progress

Cost included in

Cost of goods sold

Work in progress inventory