Question

Exercise 2-3

A job order cost sheet for Ryan Company is shown below.

Job No. 92						For 2,000 Units
Date		Direct Materials		Direct Labor		Manufacturing Overhead
Beg. bal. Jan. 1		5,200		6,000		4,200
8		6,000
12				10,000		7,500
25		2,700
27				4,000		3,000
		13,900		20,000		14,700

Cost of completed job:
Direct materials		$13,900
Direct labor		20,000
Manufacturing overhead		14,700
Total cost		$48,600
Unit cost ($48,600 ÷ 2,000)		$24.30

(a) On the basis of the foregoing data, answer the following questions.

(1) What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job?

Balance in Work in Process Inventory on January 1

$

(2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (Round answers to 0 decimal places, e.g. 55%.)

		Last year			Current year
Overhead rate			%			%

(b) Prepare summary entries at January 31 to record the current year’s transactions pertaining to Job No. 92. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 31
	(To record raw materials used)
31
	(To record factory labor used)
31
	(To record manufacturing overhead)
31
	(To record job completed)

Answer 1

Solution " Balance in work in process Inventory on January 1 = 5200 + 6000 + 4200 = 15400 2) Manufacturing overhead rate = Manfacturing over head oppleed / - Direct Labor cost 4200/6000 = 70% of derect labor Cost previous year = Goorent year = (7500+ 3000)/(10000+ 4000) = 10500/14000 75%. of direct labor cost

Date ! Account title and Explanation Debit Gredit Jan 31 | 33200 8700 14000 10500 work in process Inventory Job No 92 Dlouct Material (6000 + 2700) Direct labor (10000 + 4000) Manufacturing overhead [ 7500 +3000) [ To record material, Labor and overhead cost] finished goods Invertory - Job NO 92 work in process Inventory - Job No 92 [ To record cost of completed Job transferred to finished goods] Jan 31 48600 48600