Question

An advertising agency is estimating costs for advertising a music festival. The job will require 200 direct labor hours at a cost of $50 per hour. Overhead costs are applied at a rate of $65 per direct labor hour. What is the total estimated cost for this job? JOB COST SHEET Hours Rate Estimated Cost Materials 0.00 Total estimated cost

Answer 1

Solution 1:

Job Cost Sheet
Particulars	Hours	Rate	Estimated Cost
Direct labor	200	$50.00	$10,000.00
Overhead applied	200	$65.00	$13,000.00
Total estimated cost			$23,000.00

Solution 2:

Journal Entries
S. No	General Journal	Debit	Credit
a	Raw Material Inventory Dr	$90,000.00
	To Accounts Payable		$90,000.00
	(Raw material purchased on account)
b	Work In Process Dr	$36,500.00
	Manufacturing Overhead Dr	$19,200.00
	To Raw Material Inventory		$55,700.00
	(Being Raw material used in production)
c	Work In Process Dr	$38,000.00
	Manufacturing Overhead Dr	$12,000.00
	To Cash		$50,000.00
	(Being labor cost paid)
d	Manufacturing overhead Dr	$11,475.00
	To Cash		$11,475.00
	(Being other manufacturing overhead cost incurred)
e	Work In Process Dr ($38,000 * 125%)	$47,500.00
	To Manufacturing overhead		$47,500.00
	(Being manufacturing overhead applied to prodcution)
f	Finished Goods Inventory Dr	$56,800.00
	To Work In Process		$56,800.00
	(Being cost of completed goods transferred to finished goods)
g-1	Accounts Receivables Dr	$82,000.00
	To Sales Revenue		$82,000.00
	(To record sales on account)
g-2	Cost of goods sold Dr	$56,800.00
	To Finished Goods Inventory		$56,800.00
	(Being cost of unit sold transferred to COGS)