The Shawshank Manufacturing Co. uses a job order cost system of accounting. The
ID: 2416142 • Letter: T
Question
The Shawshank Manufacturing Co. uses a job order cost system of accounting. The following information was taken from the books of the company after all posting had been completed at the end of January: (35 points)
Jobs
Completed
Direct
Materials Cost
Direct
Labor Cost
Factory
Overhead
Units
Completed
101
$1,800
$2,000
$1,000
200
102
1,235
1,250
890
150
104
900
850
350
100
a.
Prepare the journal entries to allocate the costs of materials, labor, and factory overhead to each job and to transfer the costs of jobs completed to Finished Goods.
b.
Compute the total production cost of each job.
c.
Compute the unit cost of each job.
d.
Compute the selling price per unit for each job, assuming a mark-on percentage of 40 percent.
Jobs
Completed
Direct
Materials Cost
Direct
Labor Cost
Factory
Overhead
Units
Completed
101
$1,800
$2,000
$1,000
200
102
1,235
1,250
890
150
104
900
850
350
100
Explanation / Answer
a) prepare journal entries to the cost of materials,labor, and factory overhead to each job and transfer the cost of jobs completed to finished goods
(1) Raw materials were used in each job.
Work in Progress ( job 101 )
$1,800
Work in Progress ( job 102 )
$1,235
Work in Progress ( job 104 )
$900
Inventories
$3,935
(2) Total direct labour cost incurred for each job.
Work in Progress ( job 101 )
$2,000
Work in Progress ( job 102 )
$1,250
Work in Progress ( job 104 )
$850
Labour expenses
$4,100
(3) Manufacturing overheads are charged to each job
Work in Progress ( job 101 )
$1,000
Work in Progress ( job 102 )
$890
Work in Progress ( job 104 )
$350
Manufacturing overheads
$2,240
(4) The cost of each jobs are transferred from work in progress to finished goods.
Finished goods
$10,275
Work in Progress ( job 101 )
$4,800
Work in Progress ( job 102 )
$3,375
Work in Progress ( job 104 )
$2,100
b) The total production cost for each job (See in table above )
Job 101
Job 102
Job 104
4,800
3,375
2,100
c) The unit cost of each job (See in table above )
Job 101
Job 102
Job 104
24
22.50
21.00
d) The selling price per unit for each job, assuming the mark on percentage is 40% (See in table above )
Job 101
Job 102
Job 104
33.60
31.50
29.40
Table showing total production cost.cost per unit and selling price per unit for each job.
(In $)
Particulars
Job 101
Job 102
Job 104
Direct materials
1,800
1,235
900
Diirect labor
2,000
1,250
850
factory overhead
1,000
890
350
Total production cost (a)
4,800
3,375
2,100
Units (b)
200
150
100
Unit cost for each job (c) = (a)/(b)
24
22.50
21.00
Mark on(d)= (c)*40%
9.60
9
8.40
Selling price per unit for each job (e)= (c)+(d)
33.60
31.50
29.40
a) prepare journal entries to the cost of materials,labor, and factory overhead to each job and transfer the cost of jobs completed to finished goods
(1) Raw materials were used in each job.
Work in Progress ( job 101 )
$1,800
Work in Progress ( job 102 )
$1,235
Work in Progress ( job 104 )
$900
Inventories
$3,935
(2) Total direct labour cost incurred for each job.
Work in Progress ( job 101 )
$2,000
Work in Progress ( job 102 )
$1,250
Work in Progress ( job 104 )
$850
Labour expenses
$4,100
(3) Manufacturing overheads are charged to each job
Work in Progress ( job 101 )
$1,000
Work in Progress ( job 102 )
$890
Work in Progress ( job 104 )
$350
Manufacturing overheads
$2,240
(4) The cost of each jobs are transferred from work in progress to finished goods.
Finished goods
$10,275
Work in Progress ( job 101 )
$4,800
Work in Progress ( job 102 )
$3,375
Work in Progress ( job 104 )
$2,100
b) The total production cost for each job (See in table above )
Job 101
Job 102
Job 104
4,800
3,375
2,100
c) The unit cost of each job (See in table above )
Job 101
Job 102
Job 104
24
22.50
21.00
d) The selling price per unit for each job, assuming the mark on percentage is 40% (See in table above )
Job 101
Job 102
Job 104
33.60
31.50
29.40
Work in Progress ( job 101 )
$1,800
Work in Progress ( job 102 )
$1,235
Work in Progress ( job 104 )
$900
Inventories
$3,935
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