Job Order Costing using Normal Costing

Grant Company uses a job-order costing system and a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000.

At the beginning of the month on August 1, 3 jobs were in process: Job 10 had a balance of $16,000, Job 11 had a balance of 26,000, and Job 12 had a balance of $38,000.

Information on costs and hours for August:

Job 10 Job 11 Job 12

Direct materials $4,000 $4,800 $7,200

Direct labor $2,400 $3,600 $4,000

Machine hours 400 700 900

Direct labor hours 120 180 200

At the end of the month, Jobs 10 and 12 were completed. Job 10 was sold for 130% of the cost.

Instructions:

1. Prepare a brief job-order cost sheet for each of the three jobs, showing the total costs for each job through August.

2. Calculate the ending balance of the Work-In-Process Inventory as of August 31.

3. Calculate the ending balance of Finished Goods Inventory as of August 31. (Balance at August 1 =0).

4. Calculate the Cost of Goods Sold for August.

5. Prepare the journal entry to record the completion of jobs 10 and 12.

6. Prepare the journal entries to record the sale of job 10.