Question

Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $225,720 and total machine hours at 62,700. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job:    

	Job 101			Job 102			Job 103			Total
Direct materials used	$	10,800		$	8,400		$	5,800		$	25,000
Direct labor	$	16,900		$	6,900		$	5,100		$	28,900
Machine hours		1,100	hours		2,800	hours		1,400	hours		5,300	hours

Job 101 was completed and sold for $50,600.
Job 102 was completed but not sold.
Job 103 is still in process.

Actual overhead costs recorded during the first month of operations totaled $14,180.

Required:

1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion.

2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101.

3. Prepare the journal entry to transfer the balance of the Manufacturing Overhead account to Cost of Goods Sold.

(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round your intermediate calculations.)

Answer 1

Calculate predetermined overhead rate
Predetermined overhead rate	Manufacturing overhead/Machine hours
Predetermined overhead rate	225720/62700
Predetermined overhead rate	3.60	per machine hour
Calculate costs of Job 102
Direct materials used	$8,400
Direct labor costs	$6,900
Manufacturing overhead	$10,080	2800*3.60
Total costs of job 102	$25,380
Journal entry to trf to FG
General Journal	Debit	Credit
Finished goods inventory	$25,380
Work in process inventory		$25,380
(To record transfer of Job 102 to FG inventory)
Calculate costs of Job 101
Direct materials used	$10,800
Direct labor costs	$16,900
Manufacturing overhead	$3,960	1100*3.60
Total costs of job 101	$31,660
Journal entry to recognize sales revenue assuming sold on credit, is sold on cash then cash would be debited
General Journal	Debit	Credit
Accounts receivable	$50,600
Sales revenue		$50,600
(To record sale of Job 101)
Journal entry to recognize cost of goods sold
General Journal	Debit	Credit
Cost of goods sold	$31,660
Finished goods inventory		$31,660
(To record cost of goods sold)
Journal entry to transfer balance in manufacturing overhead to cost of goods sold
The balance in manufacturing overhead would be over or under applied overhead
Actual overhead costs	$14,180
Overhead applied	$33,120	(1100+2800+5300)*3.6
Over applied overhead	$18,940
General Journal	Debit	Credit
Manufacturing overhead	$18,940
Cost of goods sold		$18,940
(To eliminate over applied overhead)