Question

structions

Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $7,400 of indirect materials and $12,000 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:

Job 301		Job 302
Direct materials	$9,000	Direct materials	$21,100
Direct labor	7,700	Direct labor	16,800
Factory overhead	5,467	Factory overhead	11,928
Total	$22,167	Total	$49,828

Job 303		Job 304
Direct materials	$25,200	Direct materials	$14,800
Direct labor	16,100	Direct labor	13,900
Factory overhead	—	Factory overhead	—

Required:

Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles. a. Direct and indirect materials used. b. Direct and indirect labor used. Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles. a. Direct and indirect materials used. b. Direct and indirect labor used. c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost). d. Completion of Jobs 301 and 302. PAGE 10 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10

Answer 1

SOLUTION

S.No.	Accounts titles and Explanation	Debit ($)	Credit ($)
1.	Work in progress	70,100
	Factory overheads	7,400
	Material		77,500
	(To record direct and indirect materails used)
2.	Work in process	54,500
	Factory overheads	12,000
	Wages payable		66,500
	(To record direct and indirect labor used)
3.	Work in process	38,695
	Factory overheads		38,695
	(To record factory overheads applied on all jobs)
4.	Finished goods	71,995
	Work in process		71,995
	(To record the completion of Job 301 and 302)

Explanation -

1. Work in process (Materials) = Direct materials_{Job 301} + Direct materials_{Job 302}+ Direct materials_{Job 303}+Direct materials_{Job 304}

= $9,000 + $21,100 + $25,200 + $14,800 = $70,100

2. Work in process (Labor) = Direct Labor_{Job 301} + Direct Labor_{Job 302} + Direct Labor_{Job 303 +} Direct Labor_{Job 304}

= $7,700 + $16,800 + $16,100 + $13,900 = $54,500

3. Predetermined overhead rate = Factory overhead incurred_Job1 / Direct labor _{Job 1}

= $5,467 / $7,700 = 71%

Factory overheads applied = Direct labor used *  Predetermined overhead rate

= $54,500 * 71% = $38,695

4. Finished goods = Total cost_{Job 301} + Total cost_{Job 302}

= $22,167 + $49,828 = $71,995