A job order cost sheet for Rolen Company is shown below. Direct materials Manufa

Question

A job order cost sheet for Rolen Company is shown below.

Direct materials

Manufacturing Overhead

3,200   

14,100

$45,100

$22.55

What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job?
$

If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year?

Prepare summary entries at January 31 to record the current year's transactions pertaining to Job No. 92.

Job No. 92 For 2,000 units Date

Direct materials

Direct labor

Manufacturing Overhead

Beg. bal. Jan. 1 5,000    6,000    4,500                           8 6,000                         12 8,000    6,400                         25 2,000                         27

4,000   

3,200   

13,000    18,000    14,100    Cost of completed job     Direct materials $13,000     Direct labor 18,000     Manufacturing overhead

14,100

Total cost

$45,100

Unit cost ($45,100 ÷ 2,000)

$22.55

Explanation / Answer

1) Balance in beginning work in process = (5000+6000+4500) = 15500

2) Calculate manufacturing overhead rate :

Last year = 4500*100/6000 = 75% of direct labour cost

This year = 6400*100/8000 = 80% of direct labour cost

3) Journal entry :

Date accounts & explanation debit credit Jan 31 Work in process (6000+2000) 8000 Direct material 8000 (To assign materials to job) Jan 31 Work in process (8000+4000) 12000 Wages payable 12000 (To assign labor to job) Jan 31 Work in process (12000*80%) 9600 Manufacturing overhead 9600 (To assign overhead to job) Jan 31 Finished goods 45100 Work in process 45100 (To record cost of completed job)

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