Question

Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $205,920 and total machine hours at 62,400. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 Total Direct materials used $10,800 $ 8,700 $ 4,900 $ 24,400 Direct labor $ 16,100 $ 6,100 $ 5,700 $ 27,900 Machine hours 1,400 hours 2,700 hours 600 hours 4,700 hours Job 101 was completed and sold for $50,100. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $10,610. Required: 1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion. 2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101. 3. Prepare the journal entry to transfer the balance of the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round your intermediate calculations.) View transaction list Journal entry worksheet B C D Record the transfer of completed job 102 to finished goods inventory.

Answer 1

Solution:

Predetermined overhead rate = $205920/ 62400 = $3.30 per machine hour

Tyler Tooling
Journal Entries
No	Account Titles and Explanation	Debit	Credit
A	Finished Goods Inventory [$8700+ $6100+ (2700*$3.30)]	23710
	Work in Process Inventory		23710
B	Cost of Goods sold [$10800+ $16100 +(1400*$3.30)]	31520
	Finished Goods Inventory		31520
C	Cash	50100
	Sales Revenue		50100
D	Manufacturing Overhead [(4700*$3.30) - $10610]	4900
	Cost of Goods sold		4900