Question

of direct labor and the allocation of manufacturine overhead to Job 423. Wages are not yet paid. 1. Journalize completion of the job and the sale of the 5.200 DVDs on account Learning Objectives 2.3 Bal5284,000 .30A Accounting for transactions, construction company Sunset Construction, Inc. is a home builder in Arizona Sunset uses a job order costing system in which each house is a job. Because it constructs houses, the company uses an account titled Construction Overhead. The company applies overhead based an estimated direct labor costs. For the year, it estimated construction overhead of $1,250,000 and total direct labor cost of $2,500,000. The following events occurred during August: V a. Purchased materials on account, $440,000. b. Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned. 22, Item b to Direct Materials Direct Labor MOH House 402 $ 56,000 5 41,000 20,500 House 403 65,000 35,000 CHouse 404 62,000 57,000 28,5oo House 405 84,000 55,000 207.000 188,000 c. The company incurred total wages of $210,000. Use the data from Item b to assign the wages. Wages are not yet paid. d. Depreciation of construction equipment, $6,800. e. Other overhead costs incurred: Equipment rentals paid in cash, $34,000; Worker liability insurance expired, $6,000. f. Allocated overhead to jobs. g. Houses completed: 402, 404. h. House sold on account: 404 for $220,000. Requirements 1. Calculate Sunset's predetermined overhead allocation rate for the year. 2. Prepare journal entries to record the events in the general journal.

#2 i forgot how to calculate C

Answer 1

1. Predetermined overhead rate = Estimated construction overhead/Estimated direct labor costs = $1250000/$2500000 = 50% of direct labor cost

2.

No	Account Titles and Explanation	Debit	Credit
a.	Materials inventory	440000
	Accounts payable		440000
	(To record materials purchased on account)
b.	Work in process inventory	267000
	Materials inventory		267000
	(To record materials requisitioned)
c.	Work in process inventory	188000
	Construction overhead	22000
	Wages payable		210000
	(To record total wages incurred)
d.	Construction overhead	6800
	Accumulated depreciation-equipment		6800
	(To record depreciation on construction equipment)
e.	Construction overhead	40000
	Cash		34000
	Prepaid insurance		6000
	(To record other overhead costs incurred)
f.	Work in process inventory (50% x $188000)	94000
	Construction overhead		94000
	(To record overhead allocated to jobs)
g.	Finished goods inventory ($117500 + 147500)	265000
	Work in process inventory		265000
	(To record jobs completed)
h(1)	Accounts receivable	220000
	Sales revenue		220000
	(To record sales on account)
h(2)	Cost of goods sold	147500
	Finished goods inventory		147500
	(To record the cost of jobs sold)

Working:

	House 402	House 403	House 404	House 405	Total
Direct materials	56000	65000	62000	84000	267000
Direct labor	41000	35000	57000	55000	188000
Overhead	20500	17500	28500	27500	94000
Total job cost $	117500	117500	147500	166500	549000