15-1A

Degelman Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2014, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of January 1, Job No. 49 had been completed at a cost of $90,000and was part of finished goods inventory. There was a $15,000balance in the Raw Materials Inventory account.

During the month of January, Deglman Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000and $158,000, respectively. The following additional events occurred during the month.

1.Purchased additional raw materials of $90,000on account.2.Incurred factory labor costs of $70,000. Of this amount $16,000related to employer payroll taxes.3.Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect labor $20,000; depreciation expense on equipment $19,000; and various other manufacturing overhead costs on account $16,000.4.Assigned direct materials and direct labor to jobs as follows.

Job No.

Direct Materials

Direct Labor

50$10,000$5,0005139,00025,0005230,00020,000

Calculate the predetermined overhead rate for 2014, assuming Degelman Company estimates total manufacturing overhead costs of $980,000, direct labor costs of $700,000, and direct labor hours of20,000for the year.(Round answer to the nearest whole percent, e.g. 25.)

Predetermined overhead rate

%

Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50.

Job No. 50

Date

Direct Materials

Direct Labor

Manufacturing Overhead

Beg.$

$

$

Jan.

$

$

$

Cost of completed jobDirect materials$

Direct labor

Manufacturing overhead

Total cost$

Job No. 51

Date

Direct Materials

Direct Labor

Manufacturing Overhead

Jan.$

$

$

$

$

$

Cost of completed jobDirect materials$

Direct labor

Manufacturing overhead

Total cost$

Job No. 52

Date

Direct Materials

Direct Labor

Manufacturing Overhead

Jan.$

$

$

Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

(1)

(2)

(3)

Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a).(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

(1)

(2)

(3)

Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

Prepare the journal entry (or entries) to record the sale of any job(s) during the month.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

(1)

(To record cost of jobs.)(2)

(To record sale of jobs.)

What is the balance in the Finished Goods Inventory account at the end of the month? What does this balance consist of?

Finished Goods Inventory$

Job No. 50Job No. 51Job No. 52Jobs 50 and 51Jobs 51 and 52Jobs 50 and 52

What is the amount of over- or underapplied overhead?

Manufacturing Overhead$

OverappliedUnderapplied