Jensen Fences uses job order costing. Manufacturing overhead is charged to individual jobs through the use of a predetermined overhead rate based on direct labor costs. The following information appears in the company's Work in Process Inventory account for the month of June: Debits to account: Balance, June 1 Direct materials Direct labor $5,000 $18,000 $12,300 Manufacturing overhead (applied to jobs as 125% of direct labor cost) $15,375 Total debits to account Credits to account: Transferred to Finished Goods Inventory account $50,675 $44,000 $6,675 Balance, June 30 Instructions a. Assuming that the direct labor charged to the jobs still in process at June 30 amounts to $1,600, compute the amount of manufacturing overhead and the amount of direct materials that have been charged to these jobs as of June 30. b. Prepare general journal entries to summarize: 1. The manufacturing costs (direct materials, direct labor, and overhead) charged to production during June. 2. The transfer of production completed during June to the Finished Goods Inventory account. 3. The cash sale of 80 percent of the merchandise completed during June at a total sales price of $53,000. Show the related cost of goods sold in a separate journal entry.
Jensen Fences uses job order costing. Manufacturing overhead is charged to individual jobs through the use of a predetermined overhead rate based on direct labor costs. The following information appears in the company's Work in Process Inventory account for the month of June: Debits to account: Balance, June 1 Direct materials Direct labor $5,000 $18,000 $12,300 Manufacturing overhead (applied to jobs as 125% of direct labor cost) $15,375 Total debits to account Credits to account: Transferred to Finished Goods Inventory account $50,675 $44,000 $6,675 Balance, June 30 Instructions a. Assuming that the direct labor charged to the jobs still in process at June 30 amounts to $1,600, compute the amount of manufacturing overhead and the amount of direct materials that have been charged to these jobs as of June 30. b. Prepare general journal entries to summarize: 1. The manufacturing costs (direct materials, direct labor, and overhead) charged to production during June. 2. The transfer of production completed during June to the Finished Goods Inventory account. 3. The cash sale of 80 percent of the merchandise completed during June at a total sales price of $53,000. Show the related cost of goods sold in a separate journal entry.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter5: Product And Service Costing: Job-order System
Section: Chapter Questions
Problem 21E: Lorrimer Company has a job-order cost system. The following debits (credits) appeared in the...
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Transcribed Image Text:Jensen Fences uses job order costing. Manufacturing overhead is charged to individual
jobs through the use of a predetermined overhead rate based on direct labor costs. The
following information appears in the company's Work in Process Inventory account for
the month of June:
Debits to account:
Balance, June 1
Direct materials
Direct labor
$5,000
$18,000
$12,300
Manufacturing overhead (applied to jobs as 125% of direct labor cost) $15,375
Total debits to account
Credits to account:
Transferred to Finished Goods Inventory account
$50,675
$44,000
$6,675
Balance, June 30
Instructions
a. Assuming that the direct labor charged to the jobs still in process at June 30 amounts
to $1,600, compute the amount of manufacturing overhead and the amount of direct
materials that have been charged to these jobs as of June 30.
b. Prepare general journal entries to summarize:
1. The manufacturing costs (direct materials, direct labor, and overhead) charged to
production during June.
2. The transfer of production completed during June to the Finished Goods Inventory
account.
3. The cash sale of 80 percent of the merchandise completed during June at a total sales
price of $53,000.
Show the related cost of goods sold in a separate journal entry.
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