Question

Toys World started and finished job number A26, a batch of 1000 cuddly koalas, during March 2020. The job required $4850 of direct material and 32 hours of direct labour at $20 per hour. The predetermined overhead rate is $10.50 per direct labour hour. On 31st March, 900 of the cuddly koalas were shipped to a local toy shop. Required: a) Prepare journal entries to record the incurrence of production costs, completion of job number A26 and the shipment of 900 cuddly koalas to local toy shop. b) c) Calculate the cost per cuddly koala for job number A26. How might the managers at Toys World use this information?

Answer 1

Required a

Particulars	Debit	Credit
Work In progress	$               5,826
Inventory		$               4,850
Direct labor		$                   640
Manufacturing Overhead		$                   336
(to record incurrence of production cost)
Finished Goods Inventory	$               5,826
Work In progress		$               5,826
( to record completion of Job)
Cost of Goods Sold	$         5,243.40
Finished Goods Inventory		$         5,243.40
(to record shipment of 900 koalas)

Required b

Calculation of cost per cuddly koala
Direct Material	$               4,850
Direct labor	$                   640
Manufacturing Overhead	$                   336
Total cost of Production	$               5,826
Number of units produced	1,000
Cost of production per unit	$               5.826

Managers of Toy World might use this information for pricing the cuddly koalas to its customers.

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