Question

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

Job 201	$5,090
Job 202	6,120
Job 203	4,210
Job 204	6,787
Factory supervision	2,740

Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $22 per direct labor hour. The direct labor rate is $53 per hour.

Required:

A.	Journalize the November 30 entry to record the factory labor costs.
B.	Journalize a second entry on November 30 to apply factory overhead to production for November. *Refer to the Chart of Accounts provided for the correct wording of account titles.

Answer 1

Solution:

Townsend Industries Inc.
Journal Entries
Date	Particulars	Debit	Credit
30-Nov	Work In Process Dr	$22,207.00
	Factory overhead Dr	$2,740.00
	To Factory wages payable		$24,947.00
	(To record factory labor cost)
30-Nov	Work In Process Dr ($22,207*$22/$53)	$9,218.00
	To Factory overhead		$9,218.00
	(To apply factory overhead)