Question

Exercise to Job Order Casting On March on the materials department of Cards by Hallmark received the following Receiving Report No. 110 for $1.100, materials requisition for Job 22 for 5200 materials requisition for lob 23 for $800, and Receiving Report No. 110 for 51.000 Required: Prepare the journal entries to record the transactions if the company pays for the materials on account b) On March 6, 2015, the time tickets of employees at Cards by Hallmark gave the following information ten hours for Job 22, twelve hours for Job 23, and four hours for Job 24. Employees are paid an hourly rate of S10 Required: Prepare the journal entry to record the direct labor c) Cards by Hallmark allocates factory overhead based upon hours used by a piece of equipment. At the beginning of the period, the company estimates factory overhead to be $25.000 and expects the equipment to be used for 4,000 hours. During the period Job 22 requires 1.900 hours of use of the equipment, Job 23 requires 1.700 hours, and Job 24 requires 100 hours. As of March 31, actual indirect costs include: $4,000 for indirect materials. 59.100 for indirect labor, S6,000 for utilities, and 55.200 for equipment depreciation Required: Prepare the journal entry to record the costs considered factory overhead. b. Calculate the predetermined factory overhead rate: Prepare the journal entry required to apply the factory overhead to the jobs at the end of the month is the factory overhead - overapplied or underapplied? If Cards by Hallmark has a March 31 fiscal year-end, prepare the journal entry required to dispose of the balance in Factory Overhead Factory Overhead

Answer 1

Exercise 10 - Job Order Costing

In the Books of cards by Hallmark

Journal Entries

A)

Date Particulars Debit Credit

Mar 15, 2015 Materials Inventory $4100

Accounts Payable $4100

( To record raw materials purchased on credit - Receiving report 110 ($3100+ 1000 = 4100)

Mar 15, 2015 Work- In- Process inventory $1000

Materials Inventory $1000

(To record materials assigned to Job 22 and Job 23)

B)

Date Particulars Debit Credit

Mar 6, 2015 Work- In- Process inventory $260

Direct Labor $260

(To record direct labor costs charged to Job 22, 23 and 24; i.e. 26 hours*$10 = $260)

C)

a.

Date Particulars Debit Credit

Mar 31 2015 Factory Overhead $24300

Materials Inventory $4000

Factory Payroll $9100

Utilities $6000

Accumulated Depreciation $5200

(To record the actual cost of factory overheads)

b. Calculation of Predetermined Overhead rate

Overhead rate = Estimated Overhead cost / Estimated hours

= $25000 / 4000 hours

= $6.25 per hour

c,

Date Particulars Debit Credit

Mar 31, 2015 Work-in -process Inventory $23125

Factory Overhead $23125

(To charge work in process inventory with pre determined overhead rate applied to jobs 22,23 and 24 during the month - (1900+1700+100 = 3700* $6,25 per hour = $23125)

d.

Factory overhead is under-applied in this case

Date Particulars Debit Credit

Mar 31, 2015 Cost of Goods Sold    $1175

Factory Overhead $1175

(Adjusting entry to record the under-application of overheads during the period)

Factory Overhead

raw material Inventory	4000	Work in process Inventory	23125
Factory Payroll	9100	Cost of Goods sold	1175
Utilities	6000
Accumulated Depreciation	5200
	24300		24300