Chapter 16 Class Activities Question Question 1. Grayson Company is a manufacturer that uses a job order cost system. The following data summarize the operations related to production for January, the first month of operations: Requisitioned materials for production as follows: 200 units for Job 101 at $12 per unit. 300 units for Job 102 at $14 per unit. Accumulated direct labor cost as follows: 700 hours of direct labor on Job 101 at $16 Cut 600 hours of direct labor on Job 102 at $12 our. our. . Grayson Company estimates that total factory overhead costs will be $100,000 for the year. Direct labor hours are estimated to be 25,000. The company had two completed jobs at the end of January, Jobs 101 and 102. Data on accumulated direct labor hours and units produced for these jobs are as follows: Direct Labor Hours Units Produced Job 101 Job 102 700 600 500 1,000 Required: A. Using the information provided, determine 1) The pre-determined factory overhead rate using direct labor hours as the activity base 2) The amount of factory overhead applied to Job 101 and job 102. B. Prepare the journal entries for the total requisition of direct materials and the assignment of direct labor and the allocation of factory overhead during January. Wages are not yet paid. C. Journalize the completion of the Job 101 and 102. D. Journalize the sale of Job 101 at a selling price of $50 per unit for cash. Solution: A. 1. POHR = Total estimated OH costs/Total estimated activity base = $100,000/25,000= $4 2. Applied FOH = Actual Activity base x POHR +C. Journal entries: Date Accounts January Debit Credit Requisition of materials Wages payable Assigning DL cost Cut Application of FOH D. Journal entry to record the completion of Jobs 101 and 102: Accounts Debit Credit Date January Completion of Jobs 101 & 102 E. Journal entries to record the sale of Job 101 Accounts Debit Credit Date January Recording sales Job 101 shipped to customer