Question

P3-49A Determine and record job costs (Learning Objectives 2, 3, 4, & 6) Veon Homes manufactures prefabricated chalets in Colorado. The company uses a perpetual inventory system and a job cost system in which each chalet is a job. The following events occurred during May: a. Purchased materials on account, $490,000. b. Incurred total manufacturing wages of $115,000, which included both direct labor and indirect labor. Used direct labor in manufacturing as follows: Direct Labor Chalet 13 $14,200 Chalet 14 $28,500 Chalet 15 $19,900 Chalet 16 $21,900

Answer 1

1.

Transaction	Account Titles and Explanation	Debit	Credit
a.	Raw materials inventory	490000
	Accounts payable		490000
	(To record raw materials purchased on account)
b.	Work in process inventory	84500
	Overheads	30500
	Wages payable		115000
	(To record manufacturing wages incurred)
c.	Work in process inventory	227000
	Raw materials inventory		227000
	(To record direct materials requisitioned)
d.	Overheads	6300
	Accumulated depreciation-equipment		6300
	(To record depreciation of manufacturing equipment)
e.	Overheads	18600
	Cash		10600
	Prepaid insurance		8000
	(To record other overhead costs incurred)
f.	Work in process inventory (60% x $84500)	50700
	Overheads		50700
	(To record overheads allocated to jobs)
g.	Finished goods inventory ($64120 + $94240 + $101540)	259900
	Work in process inventory		259900
	(To record chalets completed)
h.	Accounts receivable ($92000 + $141000)	233000
	Sales revenue		233000
	(To record chalets sold)
	Cost of goods sold ($64120 + $101540)	165660
	Finished goods inventory		165660
	(To record cost of chalets sold)

Working:

	Chalet 13	Chalet 14	Chalet 15	Chalet 16	Total
Direct materials	41400	56700	62400	66500	227000
Direct labor	14200	28500	19900	21900	84500
Overheads	8520	17100	11940	13140	50700
Total cost $	64120	102300	94240	101540	362200

2.

Work in Process Inventory
Beg. Bal.	0
b.	84500	259900	g.
c.	227000
f.	50700
End. Bal.	102300
Finished Goods Inventory
Beg. Bal.	0
g.	259900	165660	h.
End. Bal.	94240

3.

Work in Process Inventory balance		102300
Chalet 14:
Direct materials	56700
Direct labor	28500
Overheads	17100	102300

4.

Finished Goods Inventory balance		94240
Chalet 15:
Direct materials	62400
Direct labor	19900
Overheads	11940	94240

5.

	Chalet 13	Chalet 16
Sales revenue	92000	141000
Less: Cost of Goods Sold	64120	101540
Gross profit $	27880	39460

The gross profit must cover the selling, general, and administrative costs and generate a net income for Veon Homes.