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Jorgensen Corporation uses standard costs with its job order cost accounting system. In January, an order...

Jorgensen Corporation uses standard costs with its job order cost accounting system. In January, an order (Job No. 12) for 1,000 units of Product B was received. The standard cost of one unit of Product B is as follows.

Direct materials 3 pounds at $1.30 per pound $3.90
Direct labor 1.80 hour at $10.00 per hour 18.00
Overhead 2 hours (variable $4.40 per machine hour; fixed $3.40 per machine hour) 15.60
Standard cost per unit $37.50


Normal capacity for the month was 4,020 machine hours. During January, the following transactions applicable to Job No. 12 occurred.

1. Purchased 3,400 pounds of raw materials on account at $1.38 per pound.
2. Requisitioned 3,400 pounds of raw materials for Job No. 12.
3. Incurred 1,860 hours of direct labor at a rate of $9.95 per hour.
4. Worked 1,860 hours of direct labor on Job No. 12.
5. Incurred manufacturing overhead on account $16,850.
6. Applied overhead to Job No. 12 on basis of standard machine hours allowed.
7. Completed Job No. 12.
8.

Billed customer for Job No. 12 at a selling price of $85,000.

(A):Jorgensen Corporation uses standard costs with its job order cost accounting system. In January, an order (Job No. 12) for 1,000 units of Product B was received. The standard cost of one unit of Product B is as follows.

Direct materials 3 pounds at $1.30 per pound $3.90
Direct labor 1.80 hour at $10.00 per hour 18.00
Overhead 2 hours (variable $4.40 per machine hour; fixed $3.40 per machine hour) 15.60
Standard cost per unit $37.50


Normal capacity for the month was 4,020 machine hours. During January, the following transactions applicable to Job No. 12 occurred.

1. Purchased 3,400 pounds of raw materials on account at $1.38 per pound.
2. Requisitioned 3,400 pounds of raw materials for Job No. 12.
3. Incurred 1,860 hours of direct labor at a rate of $9.95 per hour.
4. Worked 1,860 hours of direct labor on Job No. 12.
5. Incurred manufacturing overhead on account $16,850.
6. Applied overhead to Job No. 12 on basis of standard machine hours allowed.
7. Completed Job No. 12.
8. Billed customer for Job No. 12 at a selling price of $85,000.

A:Jorgensen Corporation uses standard costs with its job order cost accounting system. In January, an order (Job No. 12) for 1,000 units of Product B was received. The standard cost of one unit of Product B is as follows.

Direct materials 3 pounds at $1.30 per pound $3.90
Direct labor 1.80 hour at $10.00 per hour 18.00
Overhead 2 hours (variable $4.40 per machine hour; fixed $3.40 per machine hour) 15.60
Standard cost per unit $37.50


Normal capacity for the month was 4,020 machine hours. During January, the following transactions applicable to Job No. 12 occurred.

1. Purchased 3,400 pounds of raw materials on account at $1.38 per pound.
2. Requisitioned 3,400 pounds of raw materials for Job No. 12.
3. Incurred 1,860 hours of direct labor at a rate of $9.95 per hour.
4. Worked 1,860 hours of direct labor on Job No. 12.
5. Incurred manufacturing overhead on account $16,850.
6. Applied overhead to Job No. 12 on basis of standard machine hours allowed.
7. Completed Job No. 12.
8. Billed customer for Job No. 12 at a selling price of $85,000.

(a) Journalize the transactions.
(b) Post to the job order cost accounts.

(c) Prepare the entry to recognize the total overhead variance.

Solutions

Expert Solution

(a)

General journal
Ref Account Title Debit Credit
1 Raw Material 4692
Accounts Payable 4692
(Purchase of raw material on account)
2 Work -in-process - Job.#12 4692
Raw Material 4692
(Raw material issued for Job.#12)
3 Wages Expense 18507
Wages Payable 18507
(Wages expense incurred for 1,860 hours)
4 Work -in-process - Job.#12 18507
Wages Expense 18507
(1,860 hours work assigned to Job#12)
5 Manufacturing Overhead 16850
Accounts Payable 16850
(Manufacturing overhead incurred)
6 Work -in-process - Job.#12 15600
Manufacturing Overhead 15600
(overhead applied to Job#12 as per standard)
7 Finished goods 38799
Work -in-process - Job.#12 38799
(Job #12 completed)
8 Accounts Receivable 85000
Sales 85000
(Billing of Job#12)
Cost of goods sold 38799
Finished goods 38799
(Cost of Job#12 sold recorded)

(b)

Work-in-process - Job#12
Ref Debit Credit Ref
2 4692 38799 7
4 18507
6 15600
38799 38799
Manufacturing Overhead
Ref Debit Credit Ref
5 16850 15600 6
1250 9
16850 16850
Cost of goods sold
Ref Debit Credit Ref
8 38799
9 1250
40049 0

(c)

Ref Account Title Debit Credit
9 Cost of goods sold 1250
Manufacturing overhead 1250
(Underapplied overhead recorded)

ekkarill92 answered 2 years ago
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