Question

True Technology Co. manufactures CDs and DVDs for computer software and entertainment companies. True uses job order costing. On September ​2, True began production of 5,000 ​DVDs, Job​ 423, for Paradigm Pictures for $ 1.80 sales price per DVD. True promised to deliver the DVDs to Paradigm Pictures by September 5. True incurred the following​ costs:

Date Labor Time Record No. Description Amount
9/02 655 10 hours @ $14 per hour $140
9/03 656 20 hours @$13 per hour $260

Date Materials Requisition No. Description Amount
9/02 63 31 lbs. Polycarbonate Plastic @ $12 per lb. $372
9/02 64 25 lbs. Acrylic Plastic @ $29 per lb. $725
9/03 74 31 lbs. Refined Aluminum @ $42 per lb. $126

1.	Prepare a job cost record for Job 423. Calculate the predetermined overhead allocation​ rate; then allocate manufacturing overhead to the job.
2.	Journalize in summary form the requisition of direct materials and the assignment of direct labor and the allocation of manufacturing overhead to Job 423. Wages are not yet paid.
3.	Journalize completion of the job and the sale of the 5 comma 0005,000 DVDs on account.

Answer 1

Part 1:                                           

Raw materials
Plastic @12 per lb.	372
Plastic @29 per lb.	725
Aluminium @42 per lb.	126
		1223
Labour
10 hours @14 per hour	140
20 hours 13 per hour	260
		400
Overhead @10 per hour		300
(30 X 10)
Job cost		1923

Part 2:

Date	Accounts description and explanation	Debit ($)	Credit ($)
	Raw materials	1223
	Manufacturing overhead	400
	Labour	300
	To Accounts payable		1923
	(Being the expenditures incurred)
	Job 423	1923
	Raw materials		1223
	Labour		400
	Manufacturing overhead		300
	(Being allocation of costs to Job 423)

Part 3:

Date	Accounts description and explanation	Debit ($)	Credit ($)
	Bank	9000
	Job 423		1923
	Profit on sale		7077
	(Being profit on sale recorded)