EXERCISES
I. The gross earnings of the factory workers for Larkin Company during the month of January are $76,000. The employer's payroll taxes for the factory payroll are $8,000. The fringe benefi ts to be paid by the employer on this payroll are $6,000. Of the total accumulated cost of factory labor, 85% is related to direct labor and 15% is attributable to indirect labor.
Instructions
(a) Prepare the entry to record the factory labor costs for the month of January.
(b) Prepare the entry to assign factory labor to production.
II. Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500. During May, a summary of source documents reveals the following.
|
Job Number
|
Materials Requisition Slips
|
Labor Time Tickets
|
|
429
|
$2,500
|
|
$1,900
|
|
|
430
|
3,500
|
|
3,000
|
|
|
431
|
4,400
|
$10,400
|
7,600
|
$12,500
|
|
General use
|
|
800
|
|
1,200
|
|
|
|
$11,200
|
|
$13,700
|
Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month.
Instructions
(a) Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429.
(b) Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets. (Use a T-account.)
III. 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
|
5,000
|
6,000
|
4,200
|
|
8
|
6,000
|
|
|
|
12
|
|
8,000
|
6,400
|
|
25
|
2,000
|
|
|
|
27
|
|
4,000
|
3,200
|
|
|
13,000
|
18,000
|
13,800
|
|
Cost of completed job:
|
|
Direct materials
|
$13,000
|
|
Direct labor
|
18,000
|
|
Manufacturing overhead
|
13,800
|
|
Total cost
|
$44,800
|
|
Unit cost ($44,800 / 2,000)
|
$22.40
|
Instructions
(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 unfi nished job?
(2) If manufacturing overhead is applied on the basis of direct labor cost, what over¬head rate was used in each year?
(b) Prepare summary entries at January 31 to record the current year's transactions per¬taining to Job No. 92.