Hours
Job 501 Job 502 Job 503
Process
Improvement
Frank Davis 12 14 11 3
Miles Coultrain 14 10 12 4
John Morgan 10 12 14 4
The direct labor rate earned per hour by the three employees is as follows:
Frank Davis $35
Miles Coultrain 40
John Morgan 30
The process improvement category includes training, quality improvement, and other indirect tasks.
a. Journalize the entry to record the factory labor costs for the week.
b. Assume that Jobs 501 and 502 were completed but not sold during the week and that Job 503 remained incomplete at the end of the week. How would the direct labor costs for all three jobs be reflected on the financial statements at the end of the week?
Answer:
a.
Work in Process 3,815
Factory Overhead 385
Wages Payable 4,200
Supporting Calculations:
Labor Costs (Hourly Rate × Hours)
Direct
Labor
Hourly Job Job Job (sum of Indirect
Rate 501 502 503 job costs) Labor
Frank Davis…… $35 $420 $490 $385 $1,295 $105
Miles Coultrain… 40 560 400 480 1,440 160
John Morgan… 30 300 360 420 1,080 120
$3,815 $385
b. The direct labor costs for the completed jobs would become part of the finished
goods inventory. The direct labor costs for Job 503 would remain part of the work
in process inventory.