Question

Entries for Direct Labor and Factory Overhead

Townsend Industries Inc. manufactures recreational vehicles. Townsend uses a job order cost system. The time tickets from November jobs are summarized as follows:

Job 11-101	$6,240
Job 11-102	9,000
Job 11-103	7,210
Job 11-104	6,750
Factory supervision	4,000

Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $18 per direct labor hour. The direct labor rate is $40 per hour.

a. Journalize the entry to record the factory labor costs.

b. Journalize the entry to apply factory overhead to production for November.

Answer 1

			Job101	Job 102	Job 103	Job 104
Direct Labour cost			6240	9000	7210	6750
Divide: Labour rate per hour			40	40	40	40
Direct Labour hours			156	225	180.25	168.75
OH rate per Hour			18	18	18	18
OH applied			2808	4050	3244.5	3037.5
Journal entries:
S.no.	Accounts title and explanations				Debit $	Credit $
a.	Work IN process-Job 101 Account Dr.				6240
	Work in process-Job 102 Account Dr.				9000
	Work in process-Job 103 Account Dr.				7210
	Work in Process-Job 104 Account Dr.				6750
	Manufacturing OH Account Dr.				4000
	Wages payable					33200
b.	Work IN process-Job 101 Account Dr.				2808
	Work in process-Job 102 Account Dr.				4050
	Work in process-Job 103 Account Dr.				3244.5
	Work in Process-Job 104 Account Dr.				3037.5
	Manufacturing Overheads account					13140