EX 19-13 Entries for factory costs and jobs completed

Law Publishing Inc. began printing operations on January 1. Jobs 401 and 402 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 403 and 404 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $2,000 of indirect materials and $9,000 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:



Job 401 Job 402
Direct materials $ 8,240 Direct materials $3,800
Direct labor 3,200 Direct labor 3,000
Factory overhead 2,240 Factory overhead 2,100
Total $13,680 Total $8,900
Job 403 Job 404
Direct materials $11,600 Direct materials $2,350
Direct labor 3,500 Direct labor 500
Factory overhead — Factory overhead —


Journalize the summary entry to record each of the following operations for January (one entry for each operation):

a. Direct and indirect materials used.
b. Direct and indirect labor used.
c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).
d. Completion of Jobs 401 and 402.


Answer:

a.
 Work in Process 25,990
Factory Overhead 2,000
Materials 27,990
b.
 Work in Process 10,200
Factory Overhead 9,000
Wages Payable 19,200
c.
 Work in Process 7,140
Factory Overhead 7,140
Predetermined overhead rate:
Job 401: $2,240 ÷ $3,200 = 70% or
Job 402: $2,100 ÷ $3,000 = 70%
Direct labor cost × Predetermined factory overhead rate:
$10,200 × 70% = $7,140
d.
 Finished Goods* 22,580
Work in Process 22,580
* $13,680 + $8,900