Bynum Manufacturing uses a job order system and applies overhead to production o

Question

Bynum Manufacturing uses a job order system and applies overhead to production on the basis of direct labor costs. On January 1, 2012, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of January 1, Job No. 49 had been completed at a cost of $ 90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account. During the month of January, Bynum Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $ 90,000 on account. 2. Incurred factory labor costs of $65,000. Of this amount, $16,000 related to employer payroll taxes. 3. Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect labor $15,000; depreciation expense on equipment $19,000; and various others manufacturing overhead costs on account $20,000. 4. Assigned direct materials and direct labor to jobs as follows. Job No. Direct Materials Direct Labor 50 $10,000 $5,000 51 $39,000 $25,000 52 $30,000 $20,000 Instructions A. Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January B. Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs of production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Posts all cost to the job cost sheets as necessary.

Explanation / Answer

Hi, Please find the answer as follows: Part A: Raw Materials Inventory Dr. 90,000 Accounts Payable Cr. 90,000 Factory Labor Dr. 65,000 Factory Wages Payable Dr. 49,000 Employer Payroll Taxes Payable Cr. 16,000 Manufacturing Overhead Dr. 71,000 Accounts Payable Cr. 20,000 Accumulated Depreciation Cr. 19,000 Raw Materials Inventory Cr. 17,000 Factory Labor Cr. 15,000 Part B: Work in Process Inventory Dr. 79,000 Raw Materials Inventory Cr. ($10,000 + $39,000 + $30,000) 79,000 Work in Process Inventory Dr. 50,000 Factory Labor Cr. ($5,000 + $25,000 + $20,000) 50,000 Work in Process Inventory Dr. 75,000 Manufacturing Overhead Cr.?($50,000 X 150% of direct labor costs) 75,000 Allocation of costs have already been covered in the last question answered by me. Thanks, Aman

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