Question

Lafarge Machine Works collects its cost data by the job order cost accumulation procedure. For Job 100, the following data are available:

Direct Materials					Direct Labor
3/14 Issued		$ 1,100		Week of Mar 20		200 hrs @ $6.10/hr
3/20 Issued	625		Week of Mar. 26			140 hrs @ $7.00/hr
3/22 Issued	450
Factory overhead applied at the rate of $3.50 per direct labor hour.

Lafarge Machine Works Job Order Cost Sheet–Job 100
Direct materials		Direct labor						Applied factory overhead
Date Issued	Amount	Date (Week of)		Hours		Rate	Cost		Date (Week of)	Hours	Rate	Cost
3/14	$1,100		3/20		200	$6.10	$1,220		3/20	200	$3.50	$700
3/20	625		3/26		140	7.00	980		3/26	140	3.50	490
3/22	450
	——–						———-					———-
	$2,175 =====						$2,200 ======					$1,190 ======

Required:

The sales price of the job, assuming that it was contracted with a markup of 45% of cost.

2. Old Navy, Inc. provided the following data for January, 2019:

Materials and supplies:
Inventory, January 1, 2019				$11,000
Purchases on account				32,000
Labor:
Accrued(payable) January 1, 2019				3,000
Paid during January				26,000
Factory overhead costs:
Supplies (issued from materials)				1,000
Indirect labor				3,000
Depreciation				1,000
Other factory overhead costs (all from outside suppliers on account)				14,000
Work in process:
	Job1	Job2	Job3	Total
Work in process January 1, 2019	$ 1,000	—	—	$ 1,000
Job costs during January, 2019
Direct materials (issued)	3,000	$5,000	$4,000	12,000
Direct labor	5,500	7,800	6,900	20,200
Applied factory overhead	5,200	8,300	7,500	21,000
Job 1 started in December, 2018, finished during January, and sold to a customer for $22,000 cash
Job 2 started in January, not yet finished.
Job 3 started in January, finished during January, and now in the finished goods inventory customerforcustomer’s disposition
Finished goods inventory January 1, 2019.

Required:

Journal entries, with detail for the respective job orders and factory overhead subsidiary records, to to record the following transactions for the January:

1. Purchase of materials on account.

2. Labor paid.

3. Labor cost distribution.

4. Materials issued.

5. Depreciation for the month.

6. Acquisition of other overhead costs on credit.

7. Overhead applied to production.

8. Jobs completed and transferred to finished goods.

9. Sales revenue.

10. Cost of goods sold.

Answer 1

A)

Direct materials	2,175.00
Direct labor	2,200.00
Applied factory overhead	1,190.00
Total factory cost	5,565.00
Markup 45% of cost	2,504.25
Sales price	8,069.25

b)

  

		Subsidiary Record	Debit	Credit
1	Materials		32,000.00
	Accounts Payable			32,000.00
2	Accrued Payroll		26,000.00
	Cash			26,000.00
3	Factory overhead Control		3,000.00
	Indirect Labor	3,000.00
	Work in process (WIP)		20,200.00
	Job1	5,500.00
	Job2	7,800.00
	Job3	6,900.00
	Payroll			23,200.00
4	Work in process (WIP)		12,000.00
	Job1	3,000.00
	Job2	5,000.00
	Job3	4,000.00
	Factory overhead control		1,000.00
	Supplies	1,000.00
	Materials			13,000.00
5	Factory overhead Control		1,000.00
	Depreciation	1,000.00
	Accumulated Depreciation			1,000.00
6	Factory overhead Control		14,000.00
	Other factory overhead costs	14,000.00
	Accounts payable			14,000.00
7	Work in process (WIP)		21,000.00
	Job1	5,200.00
	Job2	8,300.00
	Job3	7,500.00
	Factory overhead control			21,000.00
8	Finished goods		33,100.00
	Work in process (WIP)			33,100.00
	Job1	14,700.00
	Job3	18,400.00
9	Cash		22,000.00
	Sales			22,000.00
10	Cost of Goods Sold		14,700.00
	Finished Goods			14,700.00