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Jensen Fences uses job order costing. Manufacturing overhead is charged to individual jobs through the use...

Jensen Fences uses job order costing. Manufacturing overhead is charged to individual jobs through the use of a predetermined overhead rate based on direct labor costs. The following information appears in the company’s Work in Process Inventory account for the month of June.

Debits to account:
Balance, June 1 $ 5,000
Direct materials 19,000
Direct labor 12,100
Manufacturing overhead (applied to jobs as 125% of direct labor cost) 15,125
Total debits to account $ 51,225
Credits to account:
Transferred to Finished Goods Inventory account 44,000
Balance, June 30 $ 7,225

Required:

a. Assuming that the direct labor charged to the jobs still in process at June 30 amounts to $1,600, compute the amount of manufacturing overhead and the amount of direct materials that have been charged to these jobs as of June 30.

b. Prepare general journal entries to summarize:

1. The manufacturing costs (direct materials, direct labor, and overhead) charged to production during June.

2. The transfer of production completed during June to the Finished Goods Inventory account.

3. The cash sale of 80 percent of the merchandise completed during June at a total sales price of $48,000. Show the related cost of goods sold in a separate journal entry.

Solutions

Expert Solution

Computation of Manufacturng Overhead and Direct Material Chargd to Job
Overhead application rate * 125%
Manufacturing overhead applied to Jobs( 1600 * 125/100) = $ 2,000
Manufacturing Overhead = $2000
Direct Material Charged to Job= Total cost of Job in Progress- Direct Labour - Manufacturing Overhead
$7225-$1600-$2000= $3625
Hence Direct Material Charged to Job would be $3625
S. No. Accoun Tittle Debit Credit
1 Work in Process Inventory $46,225.00
Material Inventory $19,000.00
Diirect Labour $12,100.00
Manufacturing Overhead $15,125.00
To record costs charged to job during June.
2 Finished Goods Inventory $44,000.00
Work in progress Inventory $44,000.00
3 cash $48,000.00
Sales $48,000.00
To record cash sale of 80% of goods completed in June.
Cost of goods sold ( $ 48000 * 80/100)= $38,400.00
Finished Goods Inventory $38,400.00
To record cost of goods sold.

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ekkarill92 answered 1 year ago
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