Question

Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula estimate that it would incur $4,800,000 in manufacturing overhead cost at an activity level of 240,000 machine-hours e company spent the entire month of January working on a large order for 16,000 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow a. Raw materials purchased on account, $325,000. b. Raw materials used in production $290 00 80% direct materials and 20% indirectr aterials c. Labor cost accrued in the factory, $180,000 (one-third direct labor and two-thirds indirect labor). Depreciation recorded on factory equipment, $75,000 e. Other manufacturing overhead costs incurred on account, $62,000 anufacturing overhead cost was applied to production on the basis of 15,000 machine-hours actually worked during the month. g. The completed job for 16,000 p 0 custom-made machined parts was moved into the finished goods warehouse on January 31 to stomer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead.) Required 1. Prepare journal entries to record items (a) through () above (ignore item (g) for the moment) 2. Prepare T-accounts for accounts. Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T 3. Prepare a journal entry for item (g) above.

Answer 1