Question

A job order cost sheet for Ryan Company is shown below.

Job No. 92						For 2,000 Units
Date		Direct Materials		Direct Labor		Manufacturing Overhead
Beg. bal. Jan. 1		7,000		7,000		4,900
8		7,000
12				7,000		5,600
25		2,300
27				4,000		3,200
		16,300		18,000		13,700

Cost of completed job:
Direct materials		$ 16,300
Direct labor		18,000
Manufacturing overhead		13,700
Total cost		$ 48,000
Unit cost ($ 48,000 ÷ 2,000)		$ 24.00

(a) On the basis of the foregoing data, answer the following questions.

(1) What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job?

Balance in Work in Process Inventory on January 1	$

(b) Prepare summary entries at January 31 to record the current year’s transactions pertaining to Job No. 92. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)(2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (Round answers to 0 decimal places, e.g. 55%.)
Last Year Current Year

Overhead rate % %

Date	Account Titles and Explanation	Debit	Credit
Jan. 31
	(To record raw materials used)
31
	(To record factory labor used)
31
	(To record manufacturing overhead)
31
	(To record job completed)

Answer 1

1) Balance in beginning work in process = 7000+7000+4900 = $18900

2) Journal entries

Date	account and explanation	debit	credit
Jan 31	Work in process	9300
	Raw material		9300
	(To record raw material used)
Jan 31	Work in process	11000
	Wages payable		11000
	(To record factory labor used)
Jan 31	Work in process	8800
	Manufacturing overhead		8800
	(To record manufacturing overhead)
Jan 31	Finished goods	48000
	Work in process		48000
	(To record job completed)

Overhead rate :

Last year = 4900/7000 = 70% of direct labor cost

Current year = 5600/7000 = 80% of direct labor cost