Jensen Fences uses job order costing. Manufacturing overhead is charged to indiv
ID: 2430743 • Letter: J
Question
Jensen Fences uses job order costing. Manufacturing overhead is charged to individual jobs through the use of a predetermined overhead rate based on direct labor costs. The following information appears in the company’s Work in Process Inventory account for the month of June. Debits to account: Balance, June 1 $ 5,000 Direct materials 18,000 Direct labor 12,000 Manufacturing overhead (applied to jobs as 125% of direct labor cost) 15,000 Total debits to account $ 50,000 Credits to account: Transferred to Finished Goods Inventory account 44,000 Balance, June 30 $ 6,000 Required: a. Assuming that the direct labor charged to the jobs still in process at June 30 amounts to $1,600, compute the amount of manufacturing overhead and the amount of direct materials that have been charged to these jobs as of June 30. b. Prepare general journal entries to summarize: 1. The manufacturing costs (direct materials, direct labor, and overhead) charged to production during June. 2. The transfer of production completed during June to the Finished Goods Inventory account. 3. The cash sale of 80 percent of the merchandise completed during June at a total sales price of $50,000. Show the related cost of goods sold in a separate journal entry.
Explanation / Answer
given data
balance amount on 1 june = $ 5000
direct material = $ 18000
direct labor = $ 12000
manufacturing overheds (125% of direct labor cost) = $ 15000
transfered to finished goods = $ 44000
balance on 30 june = $ 6000 (job in process)
A) COMPUTATION OF MANUFACTURING OVERHEADS APPLIED :
Manufacturing overheads applied = direct labor * predetermined overhead rate
= 1600 * 125% of direct labor cost
= $ 2000
The amount of manufacturing overheads applied to job in process = $ 2000
COMPUTATION OF DIRECT MATERIAL CHANGED :
direct material changed = job in process - manufacturing overheads applied - direct labor
= 6000 - 2000 - 1600
= $ 2400
the amount of direct material changed to job in process = $ 2400
B) JOURNAL ENTRIES TO THE SUMMARIZED DATA :
1)
2)
3)
DATE PARTICULARS L/F DEBIT CREDIT work in progress a/c dr (18000+12000+15000) 45000 to direct material a/c 18000 to direct labor a/c 12000 to manufacturing overheads a/c 15000 (being manufacturing costs are changed to the production)Related Questions
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