Question
Garcia Manufacturing uses a job order costing system and applies overhead to production on the basis of direct labour hours. In 2013, costs and production
Garcia Manufacturing uses a job order costing system and applies overhead to production on the basis of direct labour hours. In 2013, costs and production data were estimated to remain the same as 2012 with total manufacturing overhead costs estimated to be $1,050,000, direct labour costs estimated to be $35 an hour, and direct labour hours to be 20,000. On January 1, 2013, Job No. 50 was the only job in process. The production data incurred prior to January 1 on this job were as follows: direct materials - $20,000 and direct labour 320 hours. As of January 1, 2013, Job No. 49 had been completed and was part of the finished goods inventory. The production data for this job were as follows: direct materials - $30,000 and direct labour 600 hours. There was also a $15,000 balance in the Raw Materials Inventory account on January 1. During the month of January, Garcia Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold during the month for $122,000 and $158,000, respectively. The following additional costs incurred during January: Purchased additional raw materials of $90,000 Incurred manufacturing overhead costs as follows: indirect materials - $17,000; indirect labour - $15,000; depreciation expenses - $19,000; and electricity - $20,000. Direct materials and direct labour were assigned to jobs during January as follows:
Job No. Direct Materials Direct Labour hours
50 $10,000 140
51 $39,000 720
52 $30,000 580
b) Prepare journal entries for the following: 1) The purchase of raw materials and manufacturing overhead costs incurred 2) The assignment of direct materials, direct labour, and manufacturing overhead to production during January 3) Completion of any jobs during January 4) Sale of any jobs during January
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