Question

Entries for Direct Labor and Factory Overhead Townsend Industries Inc. manufactures recreational vehicles. Townsend uses a job order cost system. The time tickets from November jobs are summarized as follows: $3,350 1,680 Job 201 Job 202 Job 203 Job 204 Factory supervision 1,320 2,470 1,150 Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $24 per direct labor hour. The direct labor rate is $14 per hour. If required, round final answers to the nearest dollar. a. Journalize the entry to record the factory labor costs. If an amount box does not require an entry, leave it blank. b. Journalize the entry to apply factory overhead to production for November.

Answer 1

Ans. A	Particulars	Debit	Credit
	Work in process	$8,820
	Factory overhead	$1,150
	Wages payable		$9,970
	(To record the factory labor cost)
	*Calculations for Work in process (Direct labor costs):
	Job 201	$3,350
	Job 202	$1,680
	Job 203	$1,320
	Job 204	$2,470
	Total work in process	$8,820
	*Factory supervision is the factory overhead cost.
	*Wages payable = Work in process + Factory overhead
Ans. B	Particulars	Debit	Credit
	Work in process	$15,120
	Factory overhead		$15,120
	(To apply the factory overhead)
	*Actual direct labor hours = Direct labor cost / Actual direct labor wage rate
	$8,820 / $14
	630 labor hours
	*Overhead cost applied = Predetermined overhead rate * Actual direct labor hours
	$24 * 630
	$15,120