Co. began 2010 with three jobs in process: Type of Cost Job No. Direct Material

Question

Co. began 2010 with three jobs in process:

Type of Cost
Job No. Direct Material Direct Labor Overhead Total
247 $77,200 $91,400 $36,560 $205,160
251 176,600 209,800 83,920 470,320
253 145,400 169,600 67,840 382,840
Totals $399,200 $470,800 $188,320 $1,058,320

During 2010, the following transactions occurred:
1. The firm purchased and paid for $542,000 of raw material.
2. Factory payroll records revealed the following:
• Indirect labor incurred was $54,000.
• Direct labor incurred was $602,800 and was associated with the jobs as follows:

Job No. Direct Labor Cost
247 $17,400
251 8,800
253 21,000
254 136,600
255 145,000
256 94,600
257 179,400

3. Material requisition forms issued during the year revealed the following:
• Indirect material issued totaled $76,000.
• Direct material issued totaled $466,400 and was associated with jobs as follows:

Job No. Direct Material Cost
247 $12,400
251 6,200
253 16,800
254 105,200
255 119,800
256 72,800
257 133,200

4. Overhead is applied to jobs on the basis of direct labor cost. Management budgeted overhead of $240,000 and total direct cost of $600,000 for 2010. Actual total factory overhead costs (including indirect labor and indirect material) for the year totaled $244,400.

5. Jobs #247 through #255 were completed and delivered to customers, who paid for the goods in cash. The revenue on these jobs was $2,264,774.

a. Journalize all preceding events.
b. Determine the ending balances for the jobs still in process.
c. Determine the cost of jobs sold, adjusted for underapplied or overapplied overhead.

Explanation / Answer

Details Debit Credit Material inventory 542,000.00 Cash 542,000.00 Manufacturing Overhead 54,000.00 Accounts Payable 54,000.00 Salaries and Wages Expense 602,800.00 Accounts Payable 602,800.00 WIP -247 17,400.00 WIP-251 8,800.00 WIP-253 21,000.00 WIP -254 136,600.00 WIP -255 145,000.00 WIP-256 94,600.00 WIP-257 179,400.00 Salaries and Wages Expense 602,800.00 Manufacturing Over Head 76,000.00 Material Inventory 76,000.00 WIP -247 12,400.00 WIP-251 6,200.00 WIP-253 16,800.00 WIP -254 105,200.00 WIP -255 119,800.00 WIP-256 72,800.00 WIP-257 133,200.00 Material Inventory 466,400.00 Manufacturing Over Head 244,400.00 Cash 244,400.00 WIP -247 6,927.68 WIP-251 3,503.65 WIP-253 8,360.98 WIP -254 54,386.20 WIP -255 57,730.59 WIP-256 37,664.23 WIP-257 71,426.67 Manufacturing Over Head 240,000.00 Finished Jobs- Inventory 564,417.68 WIP -247 241,887.68 WIP-255 322,530.00 Cash 2,264,774.00 Sales Revenue 2,264,774.00 b. Opening Balnces of Jobs still in Progress: WIP-251 470,320.00 WIP-253 382,840.00 WIP -254 - WIP-256 - WIP-257 - Add : Material , Labor and OH added : WIP-251 18,503.65 WIP-253 46,160.98 WIP -254 296,186.20 WIP-256 205,064.23 WIP-257 384,026.67 Closing WIP of Jobs still in progress : WIP-251 488,823.65 WIP-253 429,000.98 WIP -254 296,186.20 WIP-256 205,064.23 WIP-257 384,026.67 CWIP of all jobs 1,803,101.73 c. Manufacturing Over Head incurred Indirect Labor 54,000.00 Indirect Material 76,000.00 Cash 244,400.00 Total 374,400.00 Over Head Budgeted 240,000.00 Over Head Under applied 134,400.00

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