Bynum Manufacturing uses a job order system and applies overhead to production o
ID: 2357213 • Letter: B
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 1. Total the job cost sheets for any job (s) completed during the month. Prepare the journal entry or entries to record the completion of any job (s) during the month. 2. Prepare the journal entry (or entries) to record the sale of any job(s) during the monthExplanation / Answer
(a) $1,050,000 ÷ $700,000 direct labor costs = 150% of direct labor costs
===============================================
(c) Raw Materials Inventory..................................................................... 90,000
Accounts Payable........................................................................ 90,000
Factory Labor....................................................................................... 65,000
Factory Wages Payable.............................................................. 49,000
Employer Payroll Taxes Payable.............................................. 16,000
Manufacturing Overhead.................................................................... 71,000
Accounts Payable........................................................................ 20,000
Accumulated Depreciation......................................................... 19,000
Raw Materials Inventory........................................................... 17,000
Factory Labor............................................................................. 15,000
=============================================
(d) Work in Process Inventory.................................................................. 79,000
Raw Materials Inventory
($10,000 + $39,000 + $30,000)................................................ 79,000
Work in Process Inventory.................................................................. 50,000
Factory Labor ($5,000 + $25,000 + $20,000)........................... 50,000
Work in Process Inventory.................................................................. 75,000
Manufacturing Overhead
($50,000 X 150% of direct labor costs)................................. 75,000
========================================================
postings to job cost sheets.
(e) Job Cost Sheets
Job No. 50
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Beg.
Jan.
$20,000
10,000
$30,000
$12,000
5,000
$17,000
*$16,000*
* 7,500*
*$23,500*
Cost of completed job
Direct materials.......................................................................................... $30,000
Direct labor................................................................................................. 17,000
Manufacturing overhead.......................................................................... 23,500
Total cost............................................................................................................... $70,500
*$5,000 X 150%
Job No. 51
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Jan.
$39,000
$39,000
$25,000
$25,000
**$37,500**
**$37,500**
Cost of completed job
Direct materials.......................................................................................... $ 39,000
Direct labor................................................................................................. 25,000
Manufacturing overhead.......................................................................... 37,500
Total cost............................................................................................................... $101,500
**$25,000 X 150%
Job No. 52
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Jan.
$30,000
$20,000
***$30,000***
***$20,000 X 150%
Finished Goods Inventory.................................................................................... 172,000
Work in Process Inventory........................................................................... 172,000
($70,500 + $101,500)
===============================
(f) Accounts Receivable................................................................................... 280,000
Sales ($122,000 + $158,000)........................................................................... 280,000
Cost of Goods Sold..................................................................................... 160,500
Finished Goods Inventory
($90,000 + $70,500).................................................................................... 160,500
========================================
(g)
Finished
Goods Inventory
Beginning balance
Cost of completed jobs 50 and 51
90,000
172,000
160,500
Cost of jobs 49 and 50 sold
Ending balance
101,500
The balance in this account consists of the cost of completed Job No. 51 which has not yet been sold.
==================================
(h)
Manufacturing Overhead
Actual
71,000
Applied
75,000
4,000
The balance in the Manufacturing Overhead account is overapplied.
Job No. 50
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Beg.
Jan.
$20,000
10,000
$30,000
$12,000
5,000
$17,000
*$16,000*
* 7,500*
*$23,500*
Cost of completed job
Direct materials.......................................................................................... $30,000
Direct labor................................................................................................. 17,000
Manufacturing overhead.......................................................................... 23,500
Total cost............................................................................................................... $70,500
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