CCC Company uses a job order cost system and applies overhead to production on the basis of direct labor hours. On January 1, 2014, Job No. 25 was the only job in process. The cost incurred prior to January 1 on this job were as follows: Direct material $10,000, Direct Labor $6,000, and manufacturing overhead $9,000. Job No. 23 had been completed at a cost of $42,000 and was part of finished goods inventory. There was a $5,000 balance in the Raw Materials Inventory account.

During the month of January, the company began production on Jobs 26 and 27 and completed Job 25 and 26. Job 23 and 25 were sold on account during the month. For $63,000 and $74,000 respectively. The following additional events occurred during the month.

1. Purchase additional raw materials of $45,000 on account.
2. Incurred factory labor costs of $33,500. Of this amount, $7,500 related to employer payroll taxes.
3. Incurred manufacturing overhead cost as follows: indirect material $10,000; indirect labor $9,500; depreciation expense on equipment $12,000; and various other manufacturing overhead costs on account $11,000
4. Assigned direct materials and direct labor to jobs as follows.

Job No Direct Materials Direct Labor

25 $5,000 $3,000

26 17,000 12,000

27 13,000 9,000

5. The company uses direct labor hours as the activity base to assign overhead. Direct labor hours incurred on each job were as follows: Job No. 25, 200; Job No. 26, 800; and Job No. 27, 600.

Instructions

1. Calculate the predetermined overhead rate for the year 2014, assuming Pedriani Company estimates total manufacturing overhead costs of $440,000, direct labor cost $300,000, and direct labor hours of $20,000 for the year.
2. Open job cost sheets for Jobs 25, 26, and 27. Enter the January 1 balances on the job cost sheet for job No. 25.
3. Prepare the journal entries to record the purchases of raw materials, the factory labor costs incurred, and the manufacturing overhead cost incurred during the month of January.
4. Prepared the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead cost to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a.). Post all costs to the job cost sheets as necessary.
5. 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.
6. Prepare the journal entry (or entries) to record the sale of any job(s) during the month.
7. What is the balance in the Work in Process Inventory account at the end of the month? What does this balance consist of?
8. What is the amount of over or underapplied overhead?