Question

Entries for Factory Costs and Jobs Completed

Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $2,910 of indirect materials and $35,210 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:

Job 301				Job 302
Direct materials	$30,110			Direct materials	$14,080
Direct labor	11,500			Direct labor	6,000
Factory overhead	6,325			Factory overhead	3,300
Total	$47,935			Total	$23,380
Job 303				Job 304
Direct materials	$42,690			Direct materials	$8,670
Direct labor	12,800			Direct labor	1,700
Factory overhead				Factory overhead

Journalize the summary entry to record each of the following operations for January (one entry for each operation):

A. Direct and indirect materials used. For a compound transaction, if an amount box does not require an entry, leave it blank.

B. Direct and indirect labor used. For a compound transaction, if an amount box does not require an entry, leave it blank.

C. Factory overhead applied to all four jobs ( a single overhead rate is used based on direct labor cost)

D. Completion of Jobs 301 and 302.

Answer 1

Journal entries
Date	Particulars				Debit	Credit
a)	Work in process				95550
	Factory overhead				2910
	raw material inventory					98460
	(to record material assigned)
b)	Work in process inventory				32000
	factory overhead				35210
	wages payable					67210
	(to record direct & indirect labor)
c )	work in process inventory				17600
	manufacturing overhead					17600
	(to record manufacturing overhead applied)
d)	Finished goods inventory (47935+23380)				71315
	work in process inventory					71315
	(to record the transfer of total cost)
Calculation of total cost
Particulars			Job 301	job 302	Job 303	Job 304	Total
Direct material			30110	14080	42690	8670	95550
Direct labor			11500	6000	12800	1700	32000
factory overhead @ 55% of Direct labor			6325	3300	7040	935	17600
Total			47935	23380	62530	11305	145150
Overhead rate = Factory overhead/direct labor
Overhead rate = 6325/11500 =55%