Question

The following information reflects Walczak Company's job order production activities for May. $16,000 15,400 Raw Material Purchases Factory Payroll Cost Overhead Costs incurred: Indirect Materials Indirect Labor Other Factory OH 5,000 3,500 9,500 Walczak's predetermined OH rate is 150% of DL cost. Costs are allocated to the three jobs worked on during May as follows: Job 401 Job 402 Job 403 WIP inventory, April 30 DM DL Applied Overhead $3,600 1,700 2,550 DM DL Applied Overhead STATUS ON MAY 31 3,550 5.100 7,650 24,150 $3,500 6,000 9,000 18,500 $1,400 800 1,200 3,400 REQUIRED: 1. Determine the total cost of: a. The April 30 inventory of jobs in process b. Materials (direct and indirect) used during Mayo c. Labor (direct and indirect) used during May d. Factory OH incurred and applied during May and the amount of any over- or under- applied OH on May 31. 2. Prepare summarized journal entries for the month on record. a. Materials purchases (on credit), DM used in production, DL used in production, and OH applied b. Actual OH costs, including indirect materials, indirect labor and other OH costs c. Transfer or each completed job to the Finished Goods Inventory account d. Cost of Goods Sold e. The sale (on account) of Job 401 for $35,000 f. Removal of any underapplied or overapplied OH from the Factory OH account. 3. Prepare a schedule of Cost of Goods manufactured in May.

Answer 1

a. The April 30 inventory of jobs in process.
	Particulars	Job 401
	Direct Materials	3,600
	Add Direct Labor	1,700
	Applied Overheads	2,550
	Total Cost (3600+1700+2550)	7,850
b. Materials used during May.
	Direct Material
	Job 401	3,550
	Job 402	3,500
	Job 403	1,400
	Total Direct Materials	8,450
	Add Indirect Materials	5,000
	Total Materials Used (8450+5000)	13,450
c. Labor used during May.
	Direct Labor
	Job 401	5,100
	Job 402	6,000
	Job 403	800
	Total Direct Labor	11,900
	Add Indirect Labor	3,500
	Total Labor Used(11900+3500)	15,400

d. Factory overhead incurred and applied during May and the amount of any over- or underapplied overhead on May 31.
	Actual Overhead
	Indirect Materials	5,000
	Add Indirect Labor	3,500
	Other Factory Overhead	9,500
	Total ActualOverheads	18,000
	Less Applied Overheads ( 11900 *150%)	(17,850)
	Underapplied Overheads	150
e. Each job as of May 31, the May 31 inventories of both goods in process and finished goods, and the goods sold during May.
		Job 401	Job 402
	In Process Costs from April
	Direct Materials	3,600
	Add Direct Labor	1,700
	Applied Overheads ( 150% of direct Labor Cost)	2,550
	Cost Incurred in May
	Direct Materials	3,550	3,500
	Add Direct Labor	5,100	6,000
	Applied Overheads( 150% of direct Labor Cost)	7,650	9,000
	Total Costs	24,150	18,500
2. Prepare summarized journal entries for the month to record:
a. Materials purchases (on credit), the factory payroll (paid with cash), indirect materials, indirect labor, and the other factory overhead (paid with cash).
	Account Title & Explanation	Debit	Credit
	Raw Material inventory	16,000
	Accounts Payable		16,000
	(To record materials purchases)
	Factory Payroll .	15,400
	Cash		15,400
	(To record factory payroll)
	Factory Overhead .	5,000
	Raw Material inventory		5,000
	(To record indirect materials )
	Factory Overhead .	3,500
	Factory Payroll		3,500
	(To record indirect labor)
	Factory Overhead .	9,500
	Cash		9,500
	(To record other factory overhead)
b. Assignment of direct materials, direct labor, and overhead costs to the Goods in Process Inventory account. (Use separate debit entries for each job.)
	Goods in Process Inventory (Job 401) .	3,550
	Goods in Process Inventory (Job 402) .	3,500
	Goods in Process Inventory (Job 403) .	1,400
	Raw Material inventory		8,450
	(To assign direct materials to jobs.)
	Goods in Process Inventory (Job 401) .	5,100
	Goods in Process Inventory (Job 402) .	6,000
	Goods in Process Inventory (Job 403) .	800
	Factory Payroll .		11,900
	(To assign direct Labor to jobs.)
	Goods in Process Inventory (Job 401) .	7,650
	Goods in Process Inventory (Job 402) .	9,000
	Goods in Process Inventory (Job 403) .	1,200
	Factory Overhead .		17,850
	(To apply Overheads to jobs @ 150% of Direct labor Cost)
c. Transfer of each completed job to the Finished Goods Inventory account.
	Finished Goods Inventory .	42,650
	Goods in Process Inventory (Job 401) .	24,150
	Goods in Process Inventory (Job 402) .		18,500
	(To record completion of jobs.)
d. Cost of goods sold.
	Cost of Goods Sold .	24,150
	Finished Goods Inventory .		24,150
	(To record sale of Job 401)
e. Removal of any under applied or over applied overhead from the Factory Overhead account. (Assume the amount is not material.)
	Cost of Goods Sold .	150
	Factory Overhead .		150
	(to assign Underapplied Overheads)
3. Prepare a manufacturing statement for May.
	Walczak Company
	Manufacturing Statement
	For themonth ended May 31
	Direct Materials		8,450
	Direct Labor		11,900
	Factory Overhead .
	Indirect Materials	5,000
	Indirect Labor	3,500
	Other Factory Overhead	9,500	18,000
	Total production costs		38,350
	Add Work in process, April 30		7,850
	Total cost of Work in process		46,200
	Less Work in process, May 31		(3,400)
	Less underapplied overhead		(150)
	Cost of goods manufactured		42,650