Job Order Costing (11 points) MM, Inc. uses a job order cost system and applies overhead to production on the basis of direct labor hours. On January 1, 2020, Job W1 had been previously completed at a cost of $25,000 and was in Finished Goods Inventory. On January 1, 2020, Job #2 was the only job in process. The costs incurred on Job #2 during December 2019 were as follows: Direct Materials of $3,000, Direct Labor of $5,000 and Manufacturing Overhead of $12,600. There was a $10,000 balance in Raw Materials at the beginning of January, During the month of January, the company finished job #2 and began production on jobs #3 and #4. Job #3 was finished during January, but job #4 was still unfinished at the end of January Sales: during January, Job #1 was sold for $42,000 and Job 2 was sold for $45,000 to two different customers. The following additional events occurred during January 1. Purchased Raw Materials for $20,000, on account. 2. Incurred total Factory Labor Costs of $19,000 - $4,000 of which is the supervisor. 3. Incurred Manufacturing Overhead Costs as follows: indirect materials $12,000, indirect labor $4,000 (the supervisor mentioned above), depreciation expense $11,000 and various other Manufacturing Overhead Costs on account $6,000. 4. Assigned Direct Materials and Direct Labor to Jobs as follows: Job 2 3 4 Direct Materials $4,500 $8.500 $2,000 Direct Labor $4,000 $8,000 $3,000 Direct Labor Hours 120 280 90 Instructions: a) Calculate the predetermined overhead rate for 2020, assuming LL, Inc. estimates total manufacturing overhead costs of $700,000 and direct labor hours of 10,000 b) Attached are job cost sheets for jobs 1, 2, 3 and 4. Enter the January 1 balances for job #2 c) Prepare the journal entries to record the purchase of the raw materials, the direct factory labor costs incurred and the manufacturing overhead costs incurred during January d) Prepare the journal entries to record the assignment of Direct Materials and Manufacturing Overhead to Work in Process. (We already moved Direct Labor into WIP.) Post all costs to the job cost sheets as necessary. c) Total the job cost sheets for the jobs completed in January (jobs 2 and 3). f) Prepare the journal entries to move jobs 2 and 3 into Finished Goods Inventory 8) Prepare the journal entries to sell job #1 for $42,000 and job #2 for $45,000, both on account to different customers. h) What is the balance in the Work in Process Inventory account? What does that balance consist of? 1) What is the balance in the Finished Goods Inventory account? What does that balance consist of? 2 8 1) What is the amount of over or underapplied overhead? 3 MM, Inc. General Journal Account DEBIT CREDIT 3 8 MM, Inc. MM, Inc Job Cost Sheet Job Cost Sheet Job Ne 1 IN FINISHED GOODS sob Ne 2 IN BEGINNING W Manufacturing Overhead Month Direct Matevi Direct Labor Month Dec-19 Manufacturing Direct Materials Direct Labor Overhead Motrio Labo and Owerhead components winown. The problem simply tells us this has been completed prior to 1/1/2, te cost 5.000 Cost of Completed Iob Direct Materials Direct Labor Manufacturing on Total Cost Cost of Completed Job Direct Materials Direct Labor Manufacturing Total Com $ 25.000 MM, Inc. Job Cost Sheet MM, Inc. Job Cost Sheet Pob Ne STARTED AND FINISHED 4 Jo No 3 IN ENDING WIP Manufacturing Overhead Manufacturing Overhead Direct Materials Direct Labor Month Month Direct Material Direct Labor Jan 20 Lan-20 Cost of Completed lob Direct Materials Direct labor Manufacturing OH Total Cost Cost of Completed Job Direct Materials Direct Labor Manufacturing OH Total Cost "Manufacturing overhead is applied to jobs using direct labor HOURS 8 Job Order Costing (11 points) MM, Inc. uses a job order cost system and applies overhead to production on the basis of direct labor hours. On January 1, 2020, Job W1 had been previously completed at a cost of $25,000 and was in Finished Goods Inventory. On January 1, 2020, Job #2 was the only job in process. The costs incurred on Job #2 during December 2019 were as follows: Direct Materials of $3,000, Direct Labor of $5,000 and Manufacturing Overhead of $12,600. There was a $10,000 balance in Raw Materials at the beginning of January, During the month of January, the company finished job #2 and began production on jobs #3 and #4. Job #3 was finished during January, but job #4 was still unfinished at the end of January Sales: during January, Job #1 was sold for $42,000 and Job 2 was sold for $45,000 to two different customers. The following additional events occurred during January 1. Purchased Raw Materials for $20,000, on account. 2. Incurred total Factory Labor Costs of $19,000 - $4,000 of which is the supervisor. 3. Incurred Manufacturing Overhead Costs as follows: indirect materials $12,000, indirect labor $4,000 (the supervisor mentioned above), depreciation expense $11,000 and various other Manufacturing Overhead Costs on account $6,000. 4. Assigned Direct Materials and Direct Labor to Jobs as follows: Job 2 3 4 Direct Materials $4,500 $8.500 $2,000 Direct Labor $4,000 $8,000 $3,000 Direct Labor Hours 120 280 90 Instructions: a) Calculate the predetermined overhead rate for 2020, assuming LL, Inc. estimates total manufacturing overhead costs of $700,000 and direct labor hours of 10,000 b) Attached are job cost sheets for jobs 1, 2, 3 and 4. Enter the January 1 balances for job #2 c) Prepare the journal entries to record the purchase of the raw materials, the direct factory labor costs incurred and the manufacturing overhead costs incurred during January d) Prepare the journal entries to record the assignment of Direct Materials and Manufacturing Overhead to Work in Process. (We already moved Direct Labor into WIP.) Post all costs to the job cost sheets as necessary. c) Total the job cost sheets for the jobs completed in January (jobs 2 and 3). f) Prepare the journal entries to move jobs 2 and 3 into Finished Goods Inventory 8) Prepare the journal entries to sell job #1 for $42,000 and job #2 for $45,000, both on account to different customers. h) What is the balance in the Work in Process Inventory account? What does that balance consist of? 1) What is the balance in the Finished Goods Inventory account? What does that balance consist of? 2 8 1) What is the amount of over or underapplied overhead? 3 MM, Inc. General Journal Account DEBIT CREDIT 3 8 MM, Inc. MM, Inc Job Cost Sheet Job Cost Sheet Job Ne 1 IN FINISHED GOODS sob Ne 2 IN BEGINNING W Manufacturing Overhead Month Direct Matevi Direct Labor Month Dec-19 Manufacturing Direct Materials Direct Labor Overhead Motrio Labo and Owerhead components winown. The problem simply tells us this has been completed prior to 1/1/2, te cost 5.000 Cost of Completed Iob Direct Materials Direct Labor Manufacturing on Total Cost Cost of Completed Job Direct Materials Direct Labor Manufacturing Total Com $ 25.000 MM, Inc. Job Cost Sheet MM, Inc. Job Cost Sheet Pob Ne STARTED AND FINISHED 4 Jo No 3 IN ENDING WIP Manufacturing Overhead Manufacturing Overhead Direct Materials Direct Labor Month Month Direct Material Direct Labor Jan 20 Lan-20 Cost of Completed lob Direct Materials Direct labor Manufacturing OH Total Cost Cost of Completed Job Direct Materials Direct Labor Manufacturing OH Total Cost "Manufacturing overhead is applied to jobs using direct labor HOURS 8