Exercise 3-10 (Algo) Applying Overhead; Journal Entries; T-accounts (LO3-1, LO3-2] Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4.294,000 in manufacturing overhead cost at an activity level of 565,000 machine hours. The company spent the entire month of January working on a large order for 12,700 custom-made machined parts. The company had no work in process at the beginning of January Cost data relating to January follow: a Raw materials purchased on account, $320,000 b Raw materials used in production, $259,000 (80% direct materials and 20% Indirect materials) Labor cost accrued in the factory, $177,000 (one-third direct labor and two-thirds Indirect labor) d Depreciation recorded on factory equipment, $63,500 e Other manufacturing overhead costs incurred on account, $85,500 1 Manufacturing overhead cost was applied to production on the basis of 40,530 machine-hours actually worked during the month 9. The completed job for 12700 custom-made machined parts was moved into the finished goods warehouse on January 31 to awalt delivery to the customer in computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor and applied overhead) Required: 1. Prepare journal entries to record items (a) through (1) above Ignore item (g) for the moment) 2. Prepare T-accounts for Manufacturing Overhead and Work in Process Post the relevant items from your journal entries to these T-accounts 3. Prepare a journal entry for item (9) above 4. 10700 of the custom made machined parts are shipped to the customer in February, how much of this job's cost will be included in cost of goods sold for February? Journal entry worksheet Raw materials purchased on account, $320,000. Note: Enter debits before credits Transaction General Journal Debit Credit a. Record entry Clear entry View general Journal Dros ournal entry worksheet 1 3 4 5 6 Raw materials used in production, $259,000 (80% direct materials and 20% indirect materials). Note: Enter debits before credits. Debit General Journal Transaction Credit b. Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 Labor cost accrued in the factory, $177,000 (one-third direct labor and two- thirds indirect labor). Note: Enter debits before credits. Transaction General Journal Debit Credit C. Record entry ear entry View general journal Journal entry worksheet Other manufacturing overhead costs incurred on account, $85,500. Note: Enter debits before credits Transaction General Journal Debit Credit Record entry Clear entry View general Journal Journal entry worksheet Journal entry worksheet
