Question

1. The following account appears in the ledger after only nart of the after only part of the postings have been completed for March, the first month of the current fiscal year: Balance, March 1 Direct materials Direct labor Work in Process 182,000 417,000 210,000 Factory overhead is applied to jobs at the rate of 40% of direct labor cost. The actual factory overhead incurred for March was $79,500. Jobs completed during the month totaled $692,100. (a) Prepare the journal entries to record (1) the application of factory overhead to production during March and (2) the jobs completed during March. (b) What is the balance of the factory overhead account on March 317 (c) Was factory overhead overapplied or underapplied on March 31? (d) Determine the cost of the unfinished jobs on March 31. 2. The Forging Department accepted Job 507 on May 15th to make 1,000 widgets. To complete the job they requisitioned 2,100 sheets at $2.10 per sheet and 3,150 grommets at $0.51 per set. The cost driver that the Forging Department uses is drop-forge strokes which are counted on a machine mounted counter. $4.52 is applied as overhead for each drop-forge stroke. Additionally, $425.00 of overhead is applied to each job due to setup and teardown. Direct labor is $25.20 per hour for the machine operator and $16.30 for the machine loader. The job required 29 hours of labor by the team. When the job was complete Job 507 was transferred to Finished Goods Inventory (FGI). When the job was transferred, 60 sheets were returned unused to raw material inventory. 95 grommet sets were returned, and there were 3,115 strokes on the counter. Journalize all events depicted as of May 15th.

Answer 1

Solution:

1.)

a.) Overhead applied = $210,000 × 40% = $84,000

Journal entries:

No.of event	Account title and Explanation	Debit	Credit
1.	Work in process	$84,000
	Manufacturing overhead		$84,000
	(To record the application of factory overhead to production during March)
2.)	Finished goods	$692,100
	Work in process		$692,100
	(To record the jobs completed during March)

b.)

Balance of factory overhead = the actual factory overhead incurred for March - Overhead applied

=$79,500 - $84,000 =$(4500)

$4,500 credit

C.)

Overhead is overapplied. Because balance of factory overhead is in credit.

d.)

Total cost of jobs:
Beginning balance	$182,000
Direct materials	$417,000
Direct labor	$210,000
Overhead applied	$84,000
Total cost	$893,000

Cost of unfinished jobs =total jobs cost - job completed during month

= $893,000 - $692,100

=$200,900

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