Question

Crafty Ceramics makes custom ceramic tiles. During March Crafty worked on 25 jobs; and purchased $25,600 of raw materials on account, paid direct labor cost of $31,000, and incurred manufacturing overhead costs of $26,530. Crafty applies overhead at a rate of 80% of direct labor cost.

Job #231, one of the 25 jobs, started and completed during the month. The company’s records show the following direct materials were requisitioned for Job #231: White tiles: 1,000 units at $1.00 per unit, and High Gloss Glaze: 2 quarts at $2.00 per quart. Labor time records show Jenny Jones worked 10 hours at $20 per hour on Job #231.

Required:

A) Make journal entries to record the material requisition for Job #231.

• Make journal entry to record the labor cost for Job #231.

• Make journal entry to apply [i.e., to allocate] the manufacturing overhead to Job #231.

D) Given the total production costs for this month over all the jobs, make journal entries:

(1) to apply the total manufacturing overhead to all 25 jobs, and

(2) to close under- [or over-] applied overhead to the firm’s cost of goods sold account.

Answer 1