A job order cost sheet for Lowry Company is shown below. For 2,000 Units Date Di
ID: 2457402 • Letter: A
Question
A job order cost sheet for Lowry Company is shown below.
For 2,000 Units
Date
Direct
Materials
Direct
Labor
Manufacturing
Overhead
(a) On the basis of the foregoing data, answer the following questions.
(1) What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job?
(2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year?
(b) Prepare summary entries at January 31 to record the current year’s transactions pertaining to Job No. 92. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Jan. 31
(To record raw materials used)
31
(To record factory labor used)
31
(To record manufacturing overhead)
31
(To record job completed)
Job No. 92For 2,000 Units
Date
Direct
Materials
Direct
Labor
Manufacturing
Overhead
Explanation / Answer
Total of these 3 amounts will be the balance in work in progress.
Balance in Work in Process Inventory on January 1 is $ 5100+6600+5016 = 16716
(2) If Manufacturing Overhead is charged on the basis of Direct Labor cost, then the percentages in the Last year and current year are as follows:
Last Year
Direct Labor = $6,600, Manufacturing Overhead = $5,016. So the Overhead rate is (5,016 ÷ 6,600) *100 = 76%
Current Year
Jan 12th Direct Labor = $9,800, Manufacturing Overhead = $7840. So the Overhead rate is (7840/9800)*100 = 80%
Jan 27th Direct Labor = $4,100, Manufacturing Overhead = $3,280. So the Overhead rate is (3280/4100)*100 = 80%
So the Overhead rate in current year is 80%
Overhead rate last year is 76%
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