Question

yler 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 $199,040 and total machine hours at 62,200. 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:

Answer 1

Answer:

Required:

1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion.

Dr Finished goods inventory 22,040

    Cr WIP inventory 22,040

Job 102's total costs = $7,000 + $6,400 + ($3.20 x 2,700)

2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101.

Dr Finished goods inventory 33,640

    Cr WIP inventory 33,640

Dr Cash 51,300

    Cr Sales revenue 51,300

Dr Cost of goods sold 33,640

    Cr Finished goods inventory 33,640

Job 101's total costs = $10,400 + $17,800 + ($3.20 x 1,700)

Explanation:

The question is missing some information:

                                          Job 101    Job 102     Job 103       Total

Direct materials used       $10,400    $7,000     $4,600    $22,000

Direct labor                       $17,800    $6,400     $5,400    $29,600

Machine hours                    1,700        2,700        900         5,300

Job 101: completed and sold for $51,300

Job 102: completed but not sold.

Job 103: still work in process.

Predetermined overhead rate = $199,040 / 62,200 = $3.20 per hour

Applied overhead costs $16,960 ($3.20 per machine hour)