Chapter 3, Problem 10E

Applying Overhead; Journal Entries; T-accounts L03-1, L03-2
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs 01 the basis of machine-hours. At the beginning of the year, the company used a cost formulas to estimate that it would incur in manufacturing overhead cost at an acidity of 240,000 machine-hours.
The company spent the entire month Of January 'working on a large Order for 16,000 custom-made machined parts. The company had work impress at the beginning of January. Cost data relating to January follow:

a. Raw materials purchased on account $325.000.
b. Raw materials used in production, $290,000 (80% direct materials and 20% indirect materials).
c. Labor the factory, $180.000(one-third direct labor and -third direct labor).
d. Depreciation recorded on factory equipment. $75,000.
e. Other manufacturing overhead costs incurred on account, $62.000.
f. Manufacturing overhead cost was applied to production on the basis of 15,000 machine hours actuallyworked during the month.
g. The completed job for 16,000 custom-made machined parts was move into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials. direct labor. and appliedoverhead.)
1. Prepare a journal entry to record item (a) through (f) above [ignore item (g) for the moment].
2. Prepare T-accounts for manufacturing overhead and Work in Process. Post the relevant items from journal entries to these T- Account.
3. Prepare a journal entry for item (g) above.
4. If 10,000 of the custom-made machined parts Lee shipped to the customer in February, how much of this job's cost be included in cost of goods sold for February?