In: Accounting
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.
(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) |