Old School Publishing Inc. began printing operations on January 1. Jobs 301 and
ID: 2328606 • Letter: O
Question
Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $7,600 of indirect materials and $12,100 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:
Required:
Job 301 Direct materials $10,600 Direct labor 8,300 Factory overhead 6,557 Total $25,457Explanation / Answer
Account Titles and Explaination Debit Credit A. Work - in process inventory $ 71,200 Factor overhead $ 7,600 Raw materials inventory $ 78,800 B. Work - in process inventory $ 53,400 Factor overhead $ 12,100 Factory wages payable $ 65,500 C. Work - in process inventory ($53,400 X 79%) $ 42,186 Factor overhead $ 42,186 ` D. Finished goods inventory ($25,457 + $48,750) $ 74,207 Work - in process inventory $ 74,207 Workings: Job 301 Job 302 Job 303 Job 304 Total Direct material $ 10,600 $ 21,900 $ 23,200 $ 15,500 $ 71,200 Direct labor $ 8,300 $ 15,000 $ 19,000 $ 11,100 $ 53,400 Factor overhead $ 6,557 $ 11,850 $ - $ - Total $ 25,457 $ 48,750 $ 42,200 $ 26,600 Overhead rate (Factory overhead / Direct labor) 79% 79%
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