Question

Using this information:
A job order cost sheet for Ryan Company is shown below. Job No. 92 Direct Materials Date For 2,000 Units Manufacturing Overhead Direct Labor Beg. bal. Jan. 1 6,000 4,200 6,700 6,000 6,000 4,500 2,500 3,000 4,000 16,000 15,200 11,700 Cost of completed job: Direct materials Direct labor Manufacturing overhead Total cost Unit cost ($42,900 2,000) $15,200 16,000 11,700 $42,900 $21.45
Answer the following, Please explain briefly.

Answer 1

Answer :-

a)1)The balance in Work in Process Inventory on January 1 if this was the only unfinished job :-

Balance in Work in Process on January 1 = Beginning balance of direct materials + Beginning balance of direct labor + Beginning balance of manufacturing overhead

Given , Beginning balance of direct Materials = $6,700

Beginning balance of direct labor = $6,000

Beginning balance of manufacturing overhead = $4,200

Balance in Work in progress on January 1 = $6,700 + $6,000 + $4,200

Balance in Work in progress on January 1 = $16,900

a)2)If manufacturing overhead is applied on the basis of direct labor cost,the overhead rate was used in each year -

To calculated the Overhead rate in Last year we will take the beginning balance of Manufacturing Overhead and Direct Labor cost.

Overhead rate in Last year = Beginning balance of Manufacturing Overhead /Beginning balance of direct labor.

Beginning balance of direct labor = $6,000

Beginning balance of manufacturing overhead = $4,200

Overhead rate in Last year = $4,200 / $6000

Overhead rate in Last year = 70%

Now we calculated the Overhead rate of current year ,for this I have taken Total Manufacturing Overhead and Total Direct Labor cost.

Overhead rate in Current year = Manufacturing Overhead / Direct Labor cost

Manufacturing Overhead = $11,700

Direct Labor = $16,000

Overhead rate in Current year = $11,700 / $16,000

Overhead rate in Current year = 73%

.

(b)Journal entries at January 31 to record the current year’s transactions pertaining to Job No. 92.

Date	Account Titles and Explanation	Debit	Credit
Jan.31	Work in Process Dr.	$15,200
	To Raw Material Inventory		$15,200
	(To record raw materials used for completion of Job)
Jan.31	Work in Process Dr.	$16,000
	To Factory labor cost		$16,000
	(To record factory labor used)
Jan.31	Work in Process. Dr.	$11,700
	To Manufacturing Overhead		$11,700
	(To record manufacturing overhead)
Jan.31	Finished Goods Inventory Dr.	$42,900
	To Work in Process		$42,900
	(To record job completed)

In the above Journal entries, Finished Goods Inventory is equal to Total Cost for completion of Job.