A job order cost sheet for Ryan Company is shown below. Job No. 92 For 2,000 Uni

Question

A job order cost sheet for Ryan Company is shown below.

Job No. 92

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? (Round answers to 0 decimal places, e.g. 55%.)

(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

Job No. 92

For 2,000 Units

Date

Direct
Materials

Direct
Labor

Manufacturing
Overhead

Beg. bal. Jan. 1 6,400 6,560 4,592 8 6,560 12 10,000 7,500 25 2,800 27 4,000 3,000 15,760 20,560 15,092

Explanation / Answer

(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? Balance in Work in Process Inventory on January 1 17,552 $ Opening Balance of Materials + Labor + Manufacturing Overheads (2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (Round answers to 0 decimal places, e.g. 55%.) Last year Current year Overhead rate % % Overhead Rate for Last Year = $ 6,560 / 2,000 units = 3.28 $ per unit Actual Opening Overheads to be charged = 2,000 X 3.28 per unit = 6560 Opening Overheads Charged = $ 4,592 which is 70.00% of the overheads to be charged (70% overhead rate last year) Overhead Rate for Current Year = $ 20,560 / 2,000 units = 10.28 $ per unit Actual Closing Overheads to be charged = 2,000 X 10.28 per unit = 20560 Closing Overheads Charged = $ 15,092 which is 73.40% of the overheads to be charged (73.40% overhead rate last 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 WIP A/c 15,760 To Raw Materials A/c 15,760 (To record raw materials used) 31 WIP A/c 20,560 To Direct Labor A/c 20,560 (To record factory labor used) 31 WIP A/c 15,092 To Manufacturing Overheads A/c 15,092 (To record manufacturing overhead) 31

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