Exercise 15-5 Manufacturing cost flows LO P1, P2, P3
Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $8,900, direct labor of $3,400, and applied overhead of $2,890. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on account) for $26,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July.
July Product Costs Job 120 Job 121 Job 122 Total Direct materials $ 1,600 $ 8,600 $ 2,600 $ 12,800 Direct labor 2,900 4,800 3,400 11,100 Overhead applied ? ? ? ?
1. Prepare journal entries for the following in July.
- Direct materials used in production.
- Direct labor used in production.
- Overhead applied.
- The sale of Job 120.
- Cost of goods sold for Job 120.
2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)
Work in Process Finished Goods Job # Direct materials Direct labor Overhead Total cost
Exercise 15-5 Manufacturing cost flows LO P1, P2, P3
Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $8,900, direct labor of $3,400, and applied overhead of $2,890. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on account) for $26,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July.
| July Product Costs | Job 120 | Job 121 | Job 122 | Total | ||||||||
| Direct materials | $ | 1,600 | $ | 8,600 | $ | 2,600 | $ | 12,800 | ||||
| Direct labor | 2,900 | 4,800 | 3,400 | 11,100 | ||||||||
| Overhead applied | ? | ? | ? | ? | ||||||||
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1. Prepare journal entries for the following in July.
- Direct materials used in production.
- Direct labor used in production.
- Overhead applied.
- The sale of Job 120.
- Cost of goods sold for Job 120.
2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)
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Related questions
Custom Cabinetry has one job in process (Job 120) as of June 30;at that time, its job cost sheet reports direct materials of$6,500, direct labor of $4,400, and applied overhead of $3,740.Custom Cabinetry applies overhead at the rate of 85% of directlabor cost. During July, Job 120 is sold (on account) for $22,500,Job 121 is started and completed, and Job 122 is started and stillin process at the end of the month. Custom Cabinetry incurs thefollowing costs during July.
| July Product Costs | Job 120 | Job 121 | Job 122 | Total | ||||||||
| Directmaterials | $ | 2,600 | $ | 6,300 | $ | 3,300 | $ | 12,200 | ||||
| Direct labor | 3,100 | 4,600 | 2,600 | 10,300 | ||||||||
| Overhead applied | ? | ? | ? | ? | ||||||||
1. Prepare journal entries for the following in July.
Direct materials used in production.
Direct labor used in production.
Overhead applied.
The sale of Job 120.
Cost of goods sold for Job 120.
2. Compute the July 31 balances of the Work inProcess Inventory and the Finished Goods Inventory general ledgeraccounts. (Assume there are no jobs in Finished Goods Inventory asof June 30.)
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $600,000, and factory payroll cost in April is $390,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $29,000; factory rent, $34,000; factory utilities, $21,000; and factory equipment depreciation, $61,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $670,000 cash in April. Costs of the three jobs worked on in April follow.
| Job 306 | Job 307 | Job 308 | ||||||||||
| Balances on March 31 | ||||||||||||
| Direct materials | $ | 28,000 | $ | 39,000 | ||||||||
| Direct labor | 24,000 | 18,000 | ||||||||||
| Applied overhead | 12,000 | 9,000 | ||||||||||
| Costs during April | ||||||||||||
| Direct materials | 133,000 | 220,000 | $ | 115,000 | ||||||||
| Direct labor | 105,000 | 154,000 | 102,000 | |||||||||
| Applied overhead | ? | ? | ? | |||||||||
| Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Required:
1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).
2. Prepare journal entries for the month of April to record the below transactions. (Hint, there are 13 steps)
Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 306 and 307 to Finished Goods Inventory.
Cost of goods sold for Job 306.
Revenue from the sale of Job 306.
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
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