Question

Unit Cost, Ending Work-in-Process Inventory, Journal Entries

During August, Skyler Company worked on three jobs. Data relating to these three jobs follow:

	Job 39	Job 40	Job 41
Units in each order	60	100	80
Units sold	—	100	—
Materials requisitioned	$700	$690	$800
Direct labor hours	360	400	200
Direct labor cost	$1,944	$2,440	$1,220

Overhead is assigned on the basis of direct labor hours at a rate of $2.20 per direct labor hour. During August, Jobs 39 and 40 were completed and transferred to Finished Goods Inventory. Job 40 was sold by the end of the month. Job 41 was the only unfinished job at the end of the month.

Required:

1. Calculate the per-unit cost of Jobs 39 and 40. Round unit costs to nearest cent.

Job 39	$ per unit
Job 40	$ per unit

2. Compute the ending balance in the work-in-process inventory account.
$

3. Prepare the journal entries reflecting (a.) the completion of Jobs 39 and 40 and (b.) the sale of Job 40. Make the entry to record the cost of Job 40 first, followed by the entry to record the revenue from its sale. The selling price is 150 percent of cost.

a.	Finished Goods
	Work in Process
b (1).	Cost of Goods Sold
	Finished Goods
b (2).	Accounts Receivable
	Sales Revenue

Answer 1

1) Calculate per unit Job Cost

	Job 39	Job 40
Material	700	690
Labor	1944	2440
Overhead	792	880
Total	3436	4010
Unit	60	100
Unit cost	57.27	40.10

2) Ending WIP = 800+1220+200*2.2 = 2460

3. Prepare the journal entries reflecting (a.) the completion of Jobs 39 and 40 and (b.) the sale of Job 40. Make the entry to record the cost of Job 40 first, followed by the entry to record the revenue from its sale. The selling price is 150 percent of cost.

a.	Finished Goods (3436+4010)	7446
	Work in Process		7446
b (1).	Cost of Goods Sold	4010
	Finished Goods		4010
b (2).	Accounts Receivable	6015
	Sales revenue (4010*1.5)		6015