Question

The following account appears in the ledger after only part of the postings have been completed for July, the first month of the current fiscal year: Work in Process . Balance, July 1 $ 53, 200 | Direct materials $147, 000 | Direct labor $120, 000 | Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead incurred for July was $75,000. Jobs completed during the month totaled $301,200. INSTRUCTIONS: (a) Prepare the journal entries to record (1) the application of factory overhead to production during July and (2) the jobs completed during July. (b) What was the balance of the factory overhead account on July 31? (c) Was factory overhead overapplied or underapplied on July 31? (d) Determine the cost of the unfinished jobs on July 31.

Answer 1

a) Journal entry

No	General Journal	Debit	Credit
1	Work in process (120000*60%)	72000
	Manufacturing overhead		72000
2	Finished goods	301200
	Work in process		301200

b) Balance :

Applied overhead = 72000

Actual overhead = 75000

Balance = 3000

c) Applied overhead is less than actual overhead so it is under applied overhead

d) Cost of unfinished Job

Beginning WIP	53200
Direct material	147000
Direct labor	120000
Overhead	72000
Cost of goods completed	-301200
Unfinished Job	91000