Crane Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2020, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,400, direct labor $12,240, and manufacturing overhead $16,320. As of January 1, Job 49 had been completed at a cost of $91,800 and was part of finished goods inventory. There was a $15,300 balance in the Raw Materials Inventory account. During the month of January, Crane Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $124,440 and $161,160, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $91,800 on account. Incurred factory labor costs of $71,400. Of this amount $16,320 related to employer payroll taxes. Incurred manufacturing overhead costs as follows: indirect materials $17,340; indirect labor $20,400; depreciation expense on equipment $12,240; and various other manufacturing overhead costs on account $16,320. Assigned direct materials and direct labor to jobs as follows. 2. 3. 4. Job No. Direct Materials $10,200 39,780 30,600 50 51 52 Direct Labor $5,100 25,500 20,400
Crane Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2020, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,400, direct labor $12,240, and manufacturing overhead $16,320. As of January 1, Job 49 had been completed at a cost of $91,800 and was part of finished goods inventory. There was a $15,300 balance in the Raw Materials Inventory account. During the month of January, Crane Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $124,440 and $161,160, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $91,800 on account. Incurred factory labor costs of $71,400. Of this amount $16,320 related to employer payroll taxes. Incurred manufacturing overhead costs as follows: indirect materials $17,340; indirect labor $20,400; depreciation expense on equipment $12,240; and various other manufacturing overhead costs on account $16,320. Assigned direct materials and direct labor to jobs as follows. 2. 3. 4. Job No. Direct Materials $10,200 39,780 30,600 50 51 52 Direct Labor $5,100 25,500 20,400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Crane Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On
January 1, 2020, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows:
direct materials $20,400, direct labor $12,240, and manufacturing overhead $16,320. As of January 1, Job 49 had
been completed at a cost of $91,800 and was part of finished goods inventory. There was a $15,300 balance in the Raw
Materials Inventory account.
During the month of January, Crane Company began production on Jobs 51 and 52, and completed Jobs 50 and 51.
Jobs 49 and 50 were also sold on account during the month for $124,440 and $161,160, respectively. The following
additional events occurred during the month.
1.
2.
3.
4.
Job No. Direct Materials
$10,200
50
Purchased additional raw materials of $91,800 on account.
Incurred factory labor costs of $71,400. Of this amount $16,320 related to employer payroll taxes.
Incurred manufacturing overhead costs as follows: indirect materials $17,340; indirect labor $20,400;
depreciation expense on equipment $12,240; and various other manufacturing overhead costs on account
$16,320.
Assigned direct materials and direct labor to jobs as follows.
51
52
39,780
30,600
Direct Labor
$5,100
25,500
20,400
Transcribed Image Text:Prepare the journal entries to record the assignment of (1) direct materials, (2) direct labor, and (3) manufacturing
overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a).
(Credit account titles are automatically indented when amount is entered. Do not indent
manually.)
ccount Titles and Explanation
Work in Process Inventory
Raw Materials Inventory
Work in Process Inventory
Factory Labor
Work in Process Inventory
Manufacturing Overhead
Debit
97960
62000
74400
Credit
97960
53000
74400
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