Trying to get a little help on working this accounting problem. Please help...
Jawed enterprises uses a job-order costing system and a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated manufacturing overhead for the year would be $3,600,000 and machine hours would be 18,000.
The following information pertains to December of the current year:
Job 10 Job 11 Job 12 Total
Work-in-process, Dec. 1 $106,000 $206,000 $308,000 $620,000
December production activity:
Materials requisitioned $400,000 $400,800 $407,200 $1, 208,000
Direct labor cost $26,400 $38,600 $40,000 $105,000
Machine hours 4,000 7,000 9.000 20,000
Actual manufacturing overhead cost incurred in December was $61,000.
Required:
a. Compute the predetermined overhead application rate.
b. Determine the total cost associated with each job.
c. If jobs 10 and 12 were completed, prepared the journal entry to move the cost.
d. If job 10 was sold at a price of 15 percent above cost, prepare the journal entries to record the sale.
e. What will be the balance in the work in process account ay the end of December
I don't know. I also need your help, Please!
Same, I need too.
a. To compute the predetermined overhead application rate, you need to divide the estimated manufacturing overhead for the year by the estimated machine hours.
Predetermined overhead application rate = estimated manufacturing overhead / estimated machine hours
Given:
Estimated manufacturing overhead = $3,600,000
Estimated machine hours = 18,000
Predetermined overhead application rate = $3,600,000 / 18,000 = $200 per machine hour
b. To determine the total cost associated with each job, you need to calculate the applied overhead, direct materials cost, direct labor cost, and add them together.
For each job, the formula will be:
Total cost = Direct materials cost + Direct labor cost + Applied overhead
Job 10:
Direct materials cost = $400,000
Direct labor cost = $26,400 ($26,400 x 1)
Machine hours = 4,000
Applied overhead = Machine hours x Predetermined overhead application rate
= 4,000 x $200 = $800,000
Total cost of Job 10 = $400,000 + $26,400 + $800,000 = $1,226,400
Similarly, calculate the total cost for Job 11 and Job 12 using the same formula.
Job 11:
Direct materials cost = $400,800
Direct labor cost = $38,600 ($38,600 x 1)
Machine hours = 7,000
Applied overhead = Machine hours x Predetermined overhead application rate
= 7,000 x $200 = $1,400,000
Total cost of Job 11 = $400,800 + $38,600 + $1,400,000 = $1,839,400
Job 12:
Direct materials cost = $407,200
Direct labor cost = $40,000 ($40,000 x 1)
Machine hours = 9,000
Applied overhead = Machine hours x Predetermined overhead application rate
= 9,000 x $200 = $1,800,000
Total cost of Job 12 = $407,200 + $40,000 + $1,800,000 = $2,247,200
c. If jobs 10 and 12 were completed, prepared the journal entry to move the cost.
Assuming the completion of Job 10 and Job 12:
Work-in-process account (Job 10) Debit $1,226,400
Work-in-process account (Job 12) Debit $2,247,200
Finished goods account Credit $3,473,600
d. If Job 10 was sold at a price of 15 percent above cost, prepare the journal entries to record the sale.
Assuming the sale of Job 10:
Accounts receivable Debit [Sale Price] (15% above cost)
Cost of goods sold Debit [Total cost of Job 10]
Finished goods account Credit [Total cost of Job 10]
Sales account Credit [Sale Price] (15% above cost)
e. To determine the balance in the work in process account at the end of December, you need to subtract the completed job costs from the initial work-in-process balance and add any additional costs incurred in December.
Balance in work in process account = Work-in-process, Dec. 1 + Additional costs incurred in December - Total cost of completed jobs
Given:
Work-in-process, Dec. 1 = $620,000
Additional costs incurred in December = Actual manufacturing overhead cost incurred in December ($61,000)
Total cost of completed jobs = Total cost of Job 10 + Total cost of Job 12
Balance in work in process account = $620,000 + $61,000 - ($1,226,400 + $2,247,200)