Question

Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2017, the general ledger for Case Inc. contains the following data.

Raw Materials Inventory        $4,100             Manufacturing Overhead Applied      $31,200

Work in Process Inventory      $5,250             Manufacturing Overhead Incurred     $28,800

Subsidiary data for Work in Process Inventory on June 1 are as follows.

Job Cost Sheets

  Customer Job                         

Cost Element Rodgers           Stevens           Linton             

Direct materials                                                          $600                $700                $800

Direct labor                                                                 300. 600 500

Manufacturing overhead                                            375 750   625

                                                                                    $1,275 $2,050 $1,925

            During June, raw materials purchased on account were $5,000, and all wages were paid. Additional overhead costs consisted of depreciation on equipment $800 and miscellaneous costs of $400 incurred on account.

            A summary of materials requisition slips and time tickets for June shows the following.

Customer Job                         Materials Requisition Slips                Time Tickets

Rodgers                                               $700                                        $1,000

Koss                                                     2,100   900

Stevens 400 400

Linton                                                  1,400                                       1,100                          

Rodgers 400                                          300

5,000                                       3,700

General use                                        1,400                                       1,000

                                                            $6,400                                     $4,700

            Overhead was charged to jobs at the same rate of $1.25 per dollar of direct labor cost. The patios for customers Rodgers, Stevens, and Linton were completed during June and sold for a total of $18,600. Each customer paid in full.

Instructions

Journalize the June transactions: (1) for purchase of raw materials, factory labor costs incurred, and manufacturing overhead cost incurred; (2) assignment of direct materials, labor, and overhead to production; and (3) completion of jobs and sale of goods.
Post the entries to Work in Process Inventory.
Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs.
Prepare a cost of goods manufactured schedule for June.

Answer 1

A . Journalize the June transactions: (1) for purchase of raw materials, factory labor costs incurred, and manufacturing overhead cost incurred.(2) assignment of direct materials, labor, and overhead to production; and (3) completion of jobs and sale of goods.

1	Particulars	Debit	Credit
	Raw materials inventory	5000
	Account payable		5000
	Factory labor	4700
	Cash		4700
	Manufacturing overhead	1200
	Accumulated depreciation equipment		800
	Account payable		400
2	Work in process inventory	5000
	Manufacturing overhead	1400
	Raw materials inventory		6400
	Work in process inventory	3700
	Manufacturing overhead	1000
	Factory labor		4700
	Work in process inventory (3700*1.25)	4625
	Manufacturing overhead		4625
3	Finished goods inventory	14450
	Work in process inventory		14450

Job	Direct materials	Direct labor	Manufacturing overhead	Total costs
Rodgers	1700	1600	2000	5300
Stevens	1100	1000	1250	3350
Linton	2200	1600	2000	5800
Manufacturing overhead * direct labor *1.25	14450

Cash	18600
Sales		18600
Cost of goods sold	14450
Finished goods inventory		14450

.

B . Post the entries to Work in Process Inventory

01-06-17	Balance	5250	30-06-17		14450
	Direct materials	5000
	Direct labor	3700
	Overhead applied	4625
30-06-17	Balance	4125

.

C. Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs

Work in process	4125
Job : koss
Direct materials	2100
Direct labor	900
Manufacturing overhead	1125	4125

.

D Prepare a cost of goods manufactured schedule for June

CASE INC.
cost of goods manufactured schedule
For the month ended June 30 , 2017
Work in process June 1		5250
Direct materials used	5000
Direct labor	3700
Manufacturing overhead applied	4625
Total manufacturing costs		13325
Total cost of work in process		18575
Less work in process June 30		4125
cost of goods manufactured		$14450

.