Entries for Direct Labor and Factory Overhead Townsend Industries Inc. manufactu

Question

Entries for Direct Labor and Factory Overhead

Townsend Industries Inc. manufactures recreational vehicles. Townsend uses a job order cost system. The time tickets from November jobs are summarized as follows:

Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $20 per direct labor hour. The direct labor rate is $13 per hour.

If required, round final answers to the nearest dollar.

a. Journalize the entry to record the factory labor costs. If an amount box does not require an entry, leave it blank.

b. Journalize the entry to apply factory overhead to production for November.

Job 201 $3,610 Job 202 1,800 Job 203 1,420 Job 204 2,660 Factory supervision 1,230

Explanation / Answer

Solution:

Total direct labor cost incurred = $3,610 + $1,800 + $1,420 + $2,660 = $9,490

Direct labor hours = $9,490/13 = 730 hours

Indirect labor cost incurred = $1,230

Predetermined overhead rate = $20 per direct labor hour

Applied factory overhead to production for november = 730*$20 = $14,600

Journal Entries - Townsend Industries Inc. S. No Particulars Debit Credit a Work In Process Dr $9,490.00 Factory Overhead Dr $1,230.00          To Wages Payable $10,720.00 (Being factory labor cost recorded) b Work In Process Dr $14,600.00          To Factory Overhead $14,600.00 (Being factory overhead applied to production)

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