Question

Accounting 2120

Chapter 16 – Job Order Costing

Assignment 2

I. Journalizing Transactions, completing a job cost sheet; calculating overhead

1. Create a job cost sheet for Job 300

2. Estimated annual overhead costs: $122,850; Cost driver identified: Direct labor cost;

estimated annual direct labor cost: $117,000; Calculate the pre-determined overhead rate

3. Purchased raw material on account $60,000

4. Incurred $28,000 in factory labor costs, of which $3000 was employer payroll taxes.

5. Actual OH costs were as follows:

a. Factory utilities: $2,500

b. Factory rent: $3,000 (prepaid)

c. Factory insurance: $1650 (prepaid)

d. Repairs: $800 (charge to accounts payable)

e. Depreciation: $1,200

6. Requisitioned $25,000 of material; $21,000 was for Job 300 and the remainder was

indirect material

7. Assigned $28,000 in factory labor costs; $20,000 was for Job 300; remainder was indirect

labor

8. Calculate the amount of overhead to apply if total direct labor cost for the period equals

$20,000 (journalize the transaction)

9. Calculate the cost of job 300 (which has been completed)

10.Transfer job 300 to finished goods

11.Job 300 was sold on account for $71,000

12.Calculate over or under applied overhead; prepare adjusting entry

Answer 1

Journal Entries:
		Debit $	Credit $
1	Raw Material	60000
	AP		60000
2	Payroll Expenses	28000
	Cash		28000
3	Manufacturing Overhead	2500
	Utiliites		2500
4	Manufacturing Overhead	3000
	Prepaid rent		3000
5	Manufacturing Overhead	1650
	Prepaid Insurance		1650
6	Manufacturing Overhead	800
	Repair		800
7	Manufacturing Overhead	1200
	Depreciation		1200
8	WIP	21000
	Manufacturing Overhead	4000
	Raw material		25000
9	WIP	20000
	Manufacturing Overhead	8000
	Payroll expenses		28000
10	WIP	21000
	Manufacturing Overhead		21000
	(predetermined rate = 122850/117000=$1.05 / DLC$)
Job Sheet - Job 300		Amount$
	Raw Mat	21000
	Payroll	20000
	M. overhead	21000
	Total cost	62000
predetermined rate = 122850/117000=$1.05 / DLC$
10	Finished Goods-Job 300	62000
	WIP		62000
11	Accounts Receivable	71000
	Sales revenue		71000
12	Cost of Goods Sold	150
	Manufacturing Overhead		150
	(21150 - 21000)