Garcia Manufacturing uses a job order cost system and applies overhead to produc
ID: 2389305 • Letter: G
Question
Garcia Manufacturing uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2010, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $27,800, direct labor $16,680, and manufacturing overhead $22,240. As of January 1, Job No. 49 had been completed at a cost of $125,100 and was part of finished goods inventory. There was a $20,850 balance in the Raw Materials Inventory account.
During the month of January, Garcia 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 $169,580 and $219,620, respectively. The following additional events occurred during the month.
Calculate the predetermined overhead rate for 2010, assuming Garcia Manufacturing estimates total manufacturing overhead costs of $1,459,500, direct labor costs of $973,000, and direct labor hours of 27,800 for the year.
Answer: 150% ?
Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50. Post all costs to the job cost sheets as necessary. 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.
Prepare the journal entry (or entries) to record the sale of any job(s) during the month.
Possible answer:
Cost of goods sold
Finished goods inventory
Accounts Receivable 389200
Sales 389200
What is the balance in the Finished Goods Inventory account at the end of the month?
What does this balance consist of?
What is the amount of over- or underapplied overhead?
Job No. Direct Materials Direct Labor 50 $13,900 $ 6,950 51 54,210 34,750 52 41,700 27,800Explanation / Answer
(a) $1,495,500 ÷ $973,000 direct labor costs = 153.69% of direct labor costs
(b)
Job Cost Sheets
Job No. 50
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Beg.
$27,800
$16,680
$22,240
Jan.
13,900
6,950
7,500
$41,7000
$23,630
$29,740
Cost of completed job
Direct materials
$30,000
Direct labor
17,000
Manufacturing overhead
23,500
Total cost
$70,500
(c)
Raw Materials Inventory
125,100
Accounts Payable
125,100
Factory Labor
90,350
Factory Wages Payable
68,110
Employer Payroll Taxes Payable
22,240
Manufacturing Overhead
98,690
Accounts Payable
27,800
Accumulated Depreciation
26,410
Raw Materials Inventory
23,630
Factory Labor
20,850
Job Cost Sheets
Job No. 50
Date
Direct Materials
Direct Labor
Manufacturing Overhead
Beg.
$27,800
$16,680
$22,240
Jan.
13,900
6,950
7,500
$41,7000
$23,630
$29,740
Cost of completed job
Direct materials
$30,000
Direct labor
17,000
Manufacturing overhead
23,500
Total cost
$70,500
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