Question

Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $252,400 and total machine hours at 63,100. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 Total Direct materials used $ 10,400 $ 7,500 $ 4,000 $ 21,900 Direct labor $ 16,500 $ 5,400 $ 5,200 $ 27,100 Machine hours 1,800 hours 2,400 hours 900 hours 5,100 hours Job 101 was completed and sold for $51,200. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $16,200. Required: 1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion. 2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101. 3. Prepare the journal entry to transfer the balance of the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round your intermediate calculations.)

Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $252,400 and total machine hours at 63,100. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 Direct materials used $10,400 $ 7,500 $ 4,000 Direct labor $ 16,500 $ 5,400 $ 5,200 Machine hours 1,800 hours 2,400 hours 900 hours Job 101 was completed and sold for $51,200. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $16,200. Required: 1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion. 2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101. 3. Prepare the journal entry to transfer the balance of the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round your intermediate calculations.)

Answer 1

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Answer Step 1: Calculation of Predetermined Overhead rate Predetermined Overhead rate Total manufacturing Overhead/Total machine hours 252,400 / 63,100 $ 4 per hour Step 2: Calculation of Total Production costs Direct materials used Direct labor Overhead applied (Machine hours * Predetermined rate) Total Job 101 Job 102 Job 103 Total 10,400 7,500 4,000 21,900 16,500 5,400 5,200 27,100 7,200 9,600 3,600 20,400 34,100 22,500 12,800 69,400 COGS Finished WIP 1 22,500 Finished goods inventory Work in process inventory 22,500 2a) 34,100 Cost of goods sold Finished goods inventory 34,100 2b) 51,600 Cash sales revenue 51,600 3) 4200 Manufacturing overhead (20,400 - 16,200) Cost of goods sold (Applied overhead - actual overhead) 4200