Question

Kenworth Company uses a job-order costing system. Only three jobs—Job 105, Job 106, and Job 107—were worked on during November and December. Job 105 was completed on December 10; the other two jobs were still in production on December 31, the end of the company’s operating year. Data from the job cost sheets of the three jobs follow: Job Cost Sheet Job 105 Job 106 Job 107 November costs incurred: Direct materials $ 18,900 $ 11,700 $ 0 Direct labour $ 15,400 $ 9,400 $ 0 Manufacturing overhead $ 23,100 $ 14,100 $ 0 December costs incurred: Direct materials $ 0 $ 9,400 $ 26,100 Direct labour $ 5,800 $ 7,200 $ 12,400 Manufacturing overhead ? ? ? The following additional information is available: Manufacturing overhead is applied to jobs on the basis of direct labour cost. Balances in the inventory accounts at November 30 were as follows: Raw Materials $ 47,200 Work in Process ? Finished Goods $ 97,000 Required: 1. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, and Manufacturing Overhead. Enter the November 30 inventory balances given above; in the case of Work in Process, compute the November 30 balance and enter it into the Work in Process T-account. 2. Prepare journal entries for December as follows: a. Prepare an entry to record the issue of materials into production and post the entry to appropriate T-accounts. (In the case of direct materials, it is not necessary to make a separate entry for each job.) Indirect materials used during December totalled $5,800. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) b. Prepare an entry to record the incurrence of labour cost, and post the entry to appropriate T-accounts. (In the case of direct labour cost, it is not necessary to make a separate entry for each job.) Indirect labour cost totalled $10,400 for December. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) c. Prepare an entry to record the incurrence of $19,700 in various actual manufacturing overhead costs for December (credit Accounts Payable). Post this entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3-a. What apparent predetermined overhead rate does the company use to assign overhead cost to jobs? 3-b. Prepare a journal entry to record the application of overhead cost to jobs for December (it is not necessary to make a separate entry for each job). Post this entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 4. As stated earlier, Job 105 was completed during December. Prepare a journal entry to show the transfer of this job off the production line and into the finished goods warehouse. Post the entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 5. Determine the balance at December 31 in the Work in Process inventory account. How much of this balance consists of costs charged to Job 106? Job 107?

Answer 1

J

Final number Job wise		Job 106$	Job 107$	Total $
Direct material		21,100	26,100	47,200
Direct Labour		16,600	12,400	29,000
Manf OH		24,900	18,600	43,500
Total		62,600	57,100	1,19,700

Above calculation based on below data

	Job 106$	Job 107$
Direct Material	11,700	-
Direct Labour	9,400
Manufacturing OH	14,100
Total Opening WIP	35,200	-
Pre dertermined rate
Dec cost incurred
Direct Material	9,400	26,100
Direct Labour	7,200	12,400
Manufacturing OH	10,800	18,600
(7200*1.5)=$10800 (12400*1.5=$18600

	Raw Material
Details	Dr $	Details	Dr $
Op Bal	47,200	WIP	35,500
		Manf OH	5,800
		cLS Bal	5,900
Total	47,200	Total	47,200
	WIP
Details	Dr $	Details	Dr $
Op Bal	92,600	Finished goods	71,900
Raw material	35,500
Factory wages	25,400
Manf OH	38,100	cLS Bal	1,19,700
Total	1,91,600	Total	1,91,600
	Finished goods
Details	Dr $	Details	Dr $
Op Bal	97,000
WIP	71,900	cLS Bal	1,68,900
Total	1,68,900	Total	1,68,900
	Mang OH
Details	Dr $	Details	Dr $
Raw material Inventory	5,800	WIP	38,100
Factory wages	10,400
Account payable	19,700
CLOSING BAL	2,200
Total	38,100	Total	38,100