Question

1. Journalizing transactions; calculating overhead; adjusting manufacturing overhead

1. At the beginning of the period, Jan. 1, three jobs were in process:  Job 400 (DM= $2,500; DL = $3,500; MO = $2,275), and Job 401 (DM = $6,000; DL = $6,400; MO = $4,160), Job 402 (DM = 1,900; DL = 4,800; MO = $3,120)  Create job cost sheets for each job.
2. During the month Job 403 was started.  Create a job sheet for this job. **Just title the last job cost sheet – Job 403
3. Purchased raw material on account $125,000
4. Actual overhead costs included:
   1. Paid factory rent: $4000
   2. Utilities: $2800;
   3. Insurance: $850
   4. Depreciation: $5,000
5. Estimated annual overhead costs: $276,250; Cost driver identified: Direct labor costs; estimated annual direct labor costs: $425,000; Calculate the pre-determined overhead rate.
6. Requisitioned $15,800 of material, of which $13,800 was direct material; $5,100 was for Job 400, $1,800 was for job 401, $3,600 was for Job 402, $3,300 was for Job 403 and the remainder was indirect material. Update the job cost sheets
7. Assigned $50,000 in labor costs, of which $40,500 was direct labor; $8,500 was for Job 400, $9,700 was for Job 401, $10,200 was for Job 402, $12,100 was for Job 403, and the remainder was indirect labor. Update the job cost sheets.
8. Calculate the amount of overhead to apply into process if actual direct labor costs totaled $40,500 (journalize the transaction); Calculate the amount of overhead to apply to jobs 400, 401, 402, and 403.  Update the job cost sheets.
9. Other manufacturing overhead costs that occurred during the period totaled $2,000 of which $800 was paid and the remainder was on account.
10. Jobs 400, 401, and 402 were completed this period. Total the job cost sheets and prepare necessary journal entry.
11. Job 400 was sold on account for $33,500; job 401 was sold for $48,000 cash; job 402 was sold for $41,000 of which 40% was paid and the remainder was on account. Hint: you can record the sale of each job separately.
12. Calculate over or under applied overhead for the period.
13. Prepare the adjusting entry for manufacturing overhead.

Answer 1

Predetermined overhead rate Estimated Fixed manufacturing overheads Estimated direct labor cost $276,250 $425,000 65.00% % of DL cost Job Cost Sheet Job 400 Direct material $5,100 Direct labor $8,500 Manufacturing overhead $5,525 Total Manufacturing cost $19,125 Add: Opening Work in process $8,275 Total manufacturing cost to account for $27,400 Less: Closing work in process $0 Cost of goods manufactured $27,400 Job 401 $1,800 $9,700 $6,305 $17,805 $16,560 $34,365 $0 $34,365 Job 402 $3,600 $10,200 $6,630 $20,430 $9,820 $30,250 $0 $30,250 Job 403 $3,300 $12,100 $7,865 $23,265 $0 $23,265 $23,265 $0 Manufacturing Overhead applied Job 401 Job 400 $5,100 $3,3151 Direct labor Manufacturing overhead applied at 65% $1,800 Job 402 $3,600 $2,340 Job 400 $3,300 $2,145 Total $13,800 $8,970 $1,170 Credit Debit $26,325 Account Titles and Explanations Work in process Manufacturing overhead (To record manufacturing overheads to WIP) $26,325 Credit Debit $92,015 Account Titles and Explanations Finished Goods Inventory Work in process Inventory (To record completion of FG) $92,015 Credit Debit $33,500 $33,500 $48,000 $48,000 Account Titles and Explanations Accounts Receivable Sale (To record sale of Job 400) Cash Sale (To record sale of Job 401) Cash Accounts Receivable Sale (To record sale of Job 402) Cost of goods sold Finished goods (To record COGS for jobs sold) $16,400 $24,600 $41,000 $92,015 $92,015 $2,000 Actual overheads Indirect material Indirect labor Factory rent Utilities Insurance Depreciation Other manufacturing overheads Total actual overheads $9,500 $4,000 $2,800 $850 $5,000 $2,000 $26,150b $26,325 Manufacturing overheads applied (65% of Direct labor cost $40,500) Over-applied manufacturing overheads $175 a-b Credit Debit $175 Adjusting entry Account Titles and Explanations Manufacturing overheads Cost of goods sold (To record disposal of over-applied manufacturing overheads to COGS) $175