Job order costing : The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method. Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts. Accounting rules for journal entries: To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains. To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains. To determine: The agreement of work in process inventory with job cost sheets and calculation of (1) beginning balance, (2) direct materials, (3) direct labor, (4) manufacturing overhead and (5) completed jobs.

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Chapter 20, Problem 20.2AP

(a)

To determine

Job order costing: The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.

To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To determine: The agreement of work in process inventory with job cost sheets and calculation of (1) beginning balance, (2) direct materials, (3) direct labor, (4) manufacturing overhead and (5) completed jobs.

(b)

To determine

To prepare: The adjusting entry for manufacturing overhead.

(c)

To determine

The gross profit.

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Manufacturing overhead is applied based on budgeted direct labor hours. The direct labor budget indicates that 6,200 direct labor hours will be required during the year. The variable overhead rate is $4.10 per direct labor hour. The company's budgeted fixed manufacturing overhead is $92,500 per year, which includes depreciation of $18,400. All other fixed manufacturing overhead costs represent current cash flows. The predetermined overhead rate would be_.help

Manufacturing overhead is applied based on budgeted direct labor hours. The direct labor budget indicates that 6,200 direct labor hours will be required during the year. The variable overhead rate is $4.10 per direct labor hour. The company's budgeted fixed manufacturing overhead is $92,500 per year, which includes depreciation of $18,400. All other fixed manufacturing overhead costs represent current cash flows. The predetermined overhead rate would be_.

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