Question

A job order cost sheet for Ryan Company is shown below. Job No. 92 Direct Labor Direct Materials 5,200 7,000 For 2,000 Units Manufacturing Overhead 4,900 7,000 Date Beg. bal. Jan. 1 8 12 25 27 10,000 8,000 2,900 5,000 4,000 16,900 15,100 22,000 Cost of completed job: Direct materials Direct labor Manufacturing overhead Total cost Unit cost ($54,000 = 2,000) $15,100 22,000 16,900 $54,000 $27.00 (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 $ $

Answer 1

(a).

1. Balance in work in process inventory on January 1 = Beginning balances of ( Direct materials + Direct labor + Manufacturing overhead)

==> Balance in work in process inventory on January 1 = ($5,200 + $7,000 +$4,900) = $17,100

2.

Last year :

==> Overhead rate for last year can be calculated using beginning balances.

==> Overhead rate = Manufacturing overhead / Direct labor cost = ($4,900 / $7,000) x 100 = 70%

Current year :

==> Overhead rate for current year can be calculated using any of the current period costs.

==> Overhead rate = ($8,000 / $10,000) x 100 = 80%

(b).

Credit Debit 9,900 Date Account Titles and Explanation 31-Jan Work in process inventory Raw materials inventory (To record raw materials used) 9,900 31 15,000 Work in process inventory Factory wages payable (To record factory labor used) 15,000 31 12,000 Work in process inventory Factory overhead (To record manufacturing overhead) 12,000 31 54,000 Finished goods inventory Work in process inventory (To record job completed) 54,000