Question

Hodges Company uses a job-order costing system and has the following information for the first week of June:

1. Direct labor and direct materials used

Job No.	Direct Materials	Direct Labor Hours
498	$1,500	116
501	700	105
503	800	95
506	960	16
507	415	18
508	345	42
509	650	24
Total	$5,370	416

2. The direct labor wage rate = $5

3. The overhead rate (based on direct labor hours) = $8

4. Actual overhead costs for the week = $3,300

5. Jobs completed: Nos. 498, 501, and 503.

6. The factory had no work in process at the beginning of the week.

Required:

a. Prepare journal entries to record the direct materials, direct labor and applied overhead for each job.

b. Prepare a summary that will show the total cost assigned to each job.

c. Compute the amount of overhead over- or underapplied during the week.

d. Calculate the cost of the work in process at the end of the week.

e. Job 498 was sold. Calculate the cost of goods sold and finished goods inventory.

Answer 1

Req b: Summary
Job Cost sheet
		498	501	503	506	507	508	509	Total
Current cost
Material		1500	700	800	960	415	345	650	5370
labour		580	525	475	80	90	210	120	2080
Overheads		928	840	760	128	144	336	192	3328
Total cost		3008	2,065	2,035	1,168	649	891	962	10778
Status		Sold	FG	FG	WIP	WIP	WIP	WIP
Req a:
Journal entries:
S.no.	Accounts title and explanations			Debit $	Credit $
a.	WIP Job 498 Dr.			1,500
	WIP Job 501 Dr.			700
	WIP Job 503 Dr.			800
	WIP Job 506 Dr.			960
	WIP Job 507 Dr.			415
	WIP Job 508 Dr.			345
	Wip Job 509 Dr.			650
	Raw material inventory				5370
b.	WIP Job 498 Dr.			580
	WIP Job 501 Dr.			525
	WIP Job 503 Dr.			475
	WIP Job 506 Dr.			80
	WIP Job 507 Dr.			90
	WIP Job 508 Dr.			210
	Wip Job 509 Dr.			120
	Factory wages				2080
c.	WIP Job 498 Dr.			928
	WIP Job 501 Dr.			840
	WIP Job 503 Dr.			760
	WIP Job 506 Dr.			128
	WIP Job 507 Dr.			144
	WIP Job 508 Dr.			336
	Wip Job 509 Dr.			192
	Factory overheads				3328
Req c:
Under/Over applied OH:
OH actually incurred			3300
Oh actual applied			3328
Over-applied overheads			28
Req d:
Cost of WIP
Job 506		1168
Job 507		649
Jjob 508		891
Job 509		962
Total WIP balance		3670
Req e:
COGS: Job 498		3008
Finished Goods:
Job 501	2065
Job 503	2035
Total	4100