Hastings International uses job order costing. Manufacturing overhead is charged

Question

Hastings International uses job order costing. Manufacturing overhead is charged 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 April? Instructions Assuming that the direct labor charged to the jobs still in process at April 30 amounts to $3,750. compute the amount of manufacturing overhead and the amount of direct materials that have been charged to these jobs as of April 30. Prepare general journal entries to summarize: The manufacturing costs (direct materials, direct labor, and overhead) charged to production during April. The transfer of production completed during April to the Finished Goods Inventory account. The cash sale of 90 percent of the merchandise completed during April at a total sales price of $77,000. Show the related cost of goods sold in a separate journal entry.

Explanation / Answer

Solution:

Assuming that the direct labor charged to the jobs still in process at April 30 amounts to 3,750, compute the amount of manufacturing overhead and the amount of direct materials that have been charged to these jobs as of April 30:

Journal Entries:

1) Manufacturing costs charged to production:

2) Transfer of production completed to the finished goods inventory:

3) Cash sale of 90% of merchandise completed during April at a total sales price of 77,000:

Manufacturing overhead charged to jobs in process, April 30 Direct labor charged to jobs in process, April 30      3,750 Overhead application rate 160% Manufacturing overhead applied to jobs, April 30      6,000

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