Watson Manufacturing Company employs a job order cost accounting system and keep

Question

Watson Manufacturing Company employs a job order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations: Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 75% of direct labor costs. Actual manufacturing overhead costs incurred during the month amounted to $66,000. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed during the month. Prepare journal entries to record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) How much manufacturing overhead was applied to Job 103 during the month? Compute the unit cost of Jobs 101 and 103. What is the balance in Work In Process Inventory at the end of the month? Work in process inventory Determine if manufacturing overhead was under- or overapplied during the month. How much?

Explanation / Answer

(a)

(b)

1. Manufacturing OH Applie dto Job 103 = $15,000           ($20,000*75%)

2.

3.

Work In Process Inventory is $65,000 and consists of work performed on Job 102.

4.

Actual manufacturing overhead    :$66,000

Manufacturing overhead applied   :$60,000   (80,000*75/100)

Under applied overhead               :$6000

Manufacturing overhead costs were under applied by $6,000 during the month

1 Dr. Work in Process Inventory A/c $60,000 Cr. Raw Materials Inventory A/c $60,000 2 Dr. Work in Process Inventory A/c $80,000 Cr. Factory Labor $80,000 3 Dr. Work in Process Inventory A/c $60,000 Cr. Manufacturing Overhead A/c $60,000 4 Dr. Manufacturing Overhead A/c $66,000 Cr. Cash A/c $66,000 5 Dr. Finished Goods Inventory A/c Cr. Work in Process Inventory A/c

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.