structions Old School Publishing Inc. began printing operations on January 1. Jo
ID: 2330827 • Letter: S
Question
structions
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, $7,400 of indirect materials and $12,000 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:
b. Direct and indirect labor used.
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Job 301 Job 302 Direct materials $9,000 Direct materials $21,100 Direct labor 7,700 Direct labor 16,800 Factory overhead 5,467 Factory overhead 11,928 Total $22,167 Total $49,828Explanation / Answer
SOLUTION
Explanation -
1. Work in process (Materials) = Direct materialsJob 301 + Direct materialsJob 302+ Direct materialsJob 303+Direct materialsJob 304
= $9,000 + $21,100 + $25,200 + $14,800 = $70,100
2. Work in process (Labor) = Direct LaborJob 301 + Direct LaborJob 302 + Direct LaborJob 303 + Direct LaborJob 304
= $7,700 + $16,800 + $16,100 + $13,900 = $54,500
3. Predetermined overhead rate = Factory overhead incurredJob1 / Direct labor Job 1
= $5,467 / $7,700 = 71%
Factory overheads applied = Direct labor used * Predetermined overhead rate
= $54,500 * 71% = $38,695
4. Finished goods = Total costJob 301 + Total costJob 302
= $22,167 + $49,828 = $71,995
S.No. Accounts titles and Explanation Debit ($) Credit ($) 1. Work in progress 70,100 Factory overheads 7,400 Material 77,500 (To record direct and indirect materails used) 2. Work in process 54,500 Factory overheads 12,000 Wages payable 66,500 (To record direct and indirect labor used) 3. Work in process 38,695 Factory overheads 38,695 (To record factory overheads applied on all jobs) 4. Finished goods 71,995 Work in process 71,995 (To record the completion of Job 301 and 302)Related Questions
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