Question

Job No. 92 Direct Materials Direct Labor For 2,000 Units Manufacturing Overhead Date Beg. bal. Jan. 1 7,000 4,900 5,700 7,000 10,000 8,500 2,200 4,000 21,000 3,400 16,800 14,900 Cost of completed job: Direct materials Direct labor Manufacturing overhead Total cost Unit cost ($52,700 = 2,000) $14,900 21,000 16,800 $52,700 $26.35 (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 17,600 (2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (Round answers to 0 decimal places, e.g. 55%.)

Answer 1

2) Overhead rate

	Last year	Current year
Overhead rate	4900/7000 = 70%	8500/10000 = 85%

b) Journal entry

Date	account and explanation	Debit	Credit
Jan 31	Work in process	9200
	Direct material		9200
	(To record direct material used)
Jan 31	Work in process	14000
	Wages payable		14000
	(To record factory labor used)
Jan 31	Work in process (14000*85%)	11900
	Manufacturing overhead		11900
	(To record manufacturing overhead)
Jan 31	Finished goods	52700
	Work in process		52700
	(To record job completed)