Edward and Ruth were not only best friends, they were coworkers coworkers who were very passionate about their jobs and their company! The Job Shop, the clever name of the company where they work, produces and sells several different styles of reading glasses. Today, on The Job Shop floor, Edward and Ruth are discussing the styles of readers that are currently in production. Edward: You see this job over here, Ruth? This job (#AA110) was started last month, but now its finally ready to ship. I heard that most of the order is already sold, in fact. Ruth: Really? I heard something similar about the job on the other side of the plant (#AA111). That is, I heard most of it is already sold, too. But, because that job just started at the beginning of this month, I bet itll be more profitable because it didnt have to sit in processing as long. Edward: Ruth, I dont think thats how this works. Remember our manager telling us that we need to keep our machine hours down to a minimum? The reason is because we use machine hours to budget and apply our MOH costs to our products. If the job is just sitting there, waiting for the next processing step to be completed, it is not using machine hours, so more MOH costs shouldnt be applied because hours are not being used. Edward is correct in that only one job (#AA110) is still in process on January 1, 2025. The job cost sheet for Job #AA110 shows that $7,300 of direct material had been used on the job in 2024. Direct labor used on the job in 2024 was $2,950, and MOH applied to the job in 2024 was $5,350. Ruth is also correct as Job #AA111 was started in January. But two other jobs were freshly started in January, too: #AA112, #AA113. Material cost, labor cost, and machine hour usage for January is as follows.

Job #		Direct Materials Requisitioned		Direct Labor Cost Incurred		Machine Hours Worked
AA110		$2,700		$2,200		90
AA111		8,600		3,390		270
AA112		6,800		2,800		160
AA113		5,000		2,400		120

During 2025, The Job Shop expects to incur $497,000 of MOH and expects to work 14,200 machine hours. MOH cost incurred during January is as follows.

		$19,000 of depreciation on plant and equipment.
		$4,350 of insurance on the plant.
		$6,000 of utilities.
		$6,400 of indirect labor.

The Job Shop had paid for the insurance in 2024, while the utilities will be paid in February 2025. Other information:

		Job #AA110, which was completed during January, consists of 50 units.
		Job #AA111, which was also completed during January, consists of 80 units.
		Jobs #AA112 and #AA113 were not completed during January.
		The Job Shop sells units for 140% of their manufacturing costs.

Help Edward and Ruth better understand the profitability of these jobs by preparing journal entries to record the following events

1. Use of direct materials during January.

2. The direct labor costs incurred for the month.

3. Application of MOH for January.

4. Actual MOH costs incurred for January.

5. Completion of Jobs #AA110 and #AA111.

6. A credit sale of 40 units from Job #AA110 and 50 units from Job #AA111.

Job #AA110

(To record cost of goods sold)

(To record credit sales)

Job #AA111

(To record cost of goods sold)

(To record credit sales)