Question

For 2,000 Units Job No. 92 Manufacturing Direct Direct Labor Overhead Date Materials Beg, bal. Jan. 1 5,000 6,000 4,200 6,000 12 8,000 6,400 25 2,000 27 4,000 3,200 13,000 18,000 13,800 Cost of completed job: Direct materlals $13,000 Direct labor 18,000 Manufacturing overhead 13,800 $44,800 Total cost Unit cost ($44,800 - 2,000) $22.40 (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? 24 $ Balance in Work in Process Inventory on January 1 (2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (Round answers to O decimal places, eg. 55%.) Last year Current year Overhead rate (b) Prepare summary entries at January 31 to record the current year's transactions pertaining to Job No. 92. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Date Debit Credit Jan. 31 (To record raw materials used) 31 (To record factory labor used) 31 (To record manufacturing overhead) 31 (To record job completed)

Answer 1

1)
Beg. Bal. Jan. 1 of direct materials	$5,000
Add: Beg. Bal. Jan. 1 of direct labor	$6,000
Add: Beg. Bal. Jan. 1 of manufacturing overheads	$4,200
Beg. Bal. Jan. 1 of work-in process inventory	$15,200
Therefore, work-in process inventory on Jan. 1 is $15,200.
2)	Last year	Current year
Manufacturing overheads (a) ($6,400 + $3,200)	$4,200	$9,600
Direct Labor (b) ($8,000 + $4,000)	$6,000	$12,000
Overhead rate (a/b*100)	70%	80%

3)
Date	Account Titles and Explanation	Debit	Credit
Jan. 31.	Work-in Process Inventory	$8,000
	Direct materials ($6,000 + $2,000)		$8,000
	(To record the usage of raw materials)
Jan. 31.	Work-in Process Inventory	$12,000
	Direct Labor ($8,000 + $4,000)		$12,000
	(To record factory labor used)
Jan. 31.	Work-in Process Inventory	$9,600
	Manufacturing overheads ($6,400 + $3,200)		$9,600
	(To record manufacturing overhead)
Jan. 31.	Finished Goods Inventory	$44,800
	Work-in Process Inventory		$44,800
	(To record the completion of job)