Stbinning ostng system and applies overhead costs to jobs on the basis of machin

Question

Stbinning ostng system and applies overhead costs to jobs on the basis of machine- t at an activity pplying Overhead, Journal Entries: TAccounts Lo1, LO2, LO3, LO4, LO5] EXERCISE 3-19 e other Custom Metal Works produces pany uses a job-order system Theuring overh eand copany used a cost formula to estimate that it would incur aed par Cost ge ordet-Jlob 382, which was an order for 8,000 s castings and other metal parts to customer specifications. The com- hours. $4,320,000 in manufacturing o e eginng of the verhead cos level of 576,000 machine- entire month of January working on one large th of o work in process at the beginning of the year. The company spent the a. b. Raw materials purchased on account, $315,000. Raw materials Labor was indirect labor. nals requisitioned for production, $270,000 (80% direct and 20% indirect). c. the factory, $190,000, of which $80,000 was direct labor and $110,000 overhead cost was applied to production on the basis of 40,000 machine-hours is entry, remember that the d. Depreciation recorded on factory equipment, $63,000, Other manufacturing overhead costs incurred, $85,000 (credit Accounts Payable) actually worked during January f. g· Th e completed job was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for th cost of a completed job consists of direct materials, direct labor, and applied overhead.) 1. Prepare Jjournal entries to record items (a) through () above. Ignore item (g) for the moment. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T-accounts Prepare a journal entry for item (g) above. 3. Compute the unit product cost that will appear on the job cost sheet for Job 382.

Explanation / Answer

T accounts:

Unit product cost= 326000/8000= 40.75

overhead applied:

Ref Account Debit Credit a Raw material     3,15,000 Accounts payable 3,15,000    b 1 Work in process     2,16,000    Raw material 2,16,000    b 2 Manufacturing overhead        54,000    Raw material      54,000    c 1 Work in process        80,000    Labor cost      80,000    c 2 Manufacturing overhead     1,10,000    Labor cost 1,10,000    d Manufacturing overhead        63,000    Depreciation      63,000    e Manufacturing overhead        85,000    Accounts payable      85,000    f Work in process        30,000    Manufacturing overhead      30,000    g Finished goods     3,26,000    Work in process 3,26,000

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