Question

4.

A company’s individual job sheets show the following costs:

	Job 131		Job 132		Job 133
Direct materials	$4,570		$8,735		$1,570
Direct labor	2,340		2,540		2,840

Overhead is applied at 1.20 times the direct labor cost. Use the data on the cost sheets to perform these tasks:

A. Apply overhead to each of the jobs.

	Job 131		Job 132		Job 133		Total
Direct materials	$		$		$		$
Direct labor
Overhead
Total	$		$		$		$

B. Prepare an entry to record the assignment of direct materials to work in process. If an amount box does not require an entry, leave it blank.

C. Prepare an entry to record the assignment of direct labor to work in process. If an amount box does not require an entry, leave it blank.

D. Prepare an entry to record the assignment of manufacturing overhead to work in process. If an amount box does not require an entry, leave it blank.

Answer 1

A.

	Job 131	Job 132	Job 133	Total
Direct materials	$4,570	$8,735	$1,570	$14,875
Direct labor	2,340	2,540	2,840	7,720
Overhead*	2,808	3,048	3,408	9264
Total	$9,718	$14,323	$7,818	$31,859

*Calculation of overhead : Direct labor cost X 1.20

==> Job 131 = $2,340 X 1.20 = $2,808

==> Job 132 = $2,540 X 1.20 = $3,048

==> Job 133 = $2,840 X 1.20 = $3,408

Date	Account Title and Explanation	Debit	Credit
B	Work in process inventory	14,875
	Raw materials inventory		14,875
	(To record direct materials used in production)
C	Work in process inventory	7,720
	Factory wages payable		7,720
	(To record direct labor used in production)
D	Work in process inventory	9,264
	Factory overhead		9,264
	(To apply overhead 1.20 times the direct labor cost)