Question
Kenworth Company uses a job-order costing system. Only three jobsJob 105, Job 106, and Job 107were worked on during November and December. Job 105 was
Kenworth Company uses a job-order costing system. Only three jobsJob 105, Job 106, and Job 107were worked on during November and December. Job 105 was completed on December 10; the other two jobs were still in production on December 31, the end of the companys operating year. Data from the job cost sheets of the three jobs follow:
Job Cost Sheet | |||||||||
Job 105 | Job 106 | Job 107 | |||||||
November costs incurred: | |||||||||
Direct materials | $ | 17,100 | $ | 9,900 | $ | 0 | |||
Direct labour | $ | 13,600 | $ | 7,600 | $ | 0 | |||
Manufacturing overhead | $ | 21,760 | $ | 12,160 | $ | 0 | |||
December costs incurred: | |||||||||
Direct materials | $ | 0 | $ | 8,500 | $ | 22,500 | |||
Direct labour | $ | 4,450 | $ | 6,300 | $ | 10,600 | |||
Manufacturing overhead | ? | ? | ? | ||||||
The following additional information is available:
- Manufacturing overhead is applied to jobs on the basis of direct labour cost.
- Balances in the inventory accounts at November 30 were as follows:
Raw Materials | $ | 41,800 | |
Work in Process | ? | ||
Finished Goods | $ | 88,000 | |
Required:
1. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, and Manufacturing Overhead. Enter the November 30 inventory balances given above; in the case of Work in Process, compute the November 30 balance and enter it into the Work in Process T-account.
2. Prepare journal entries for December as follows:
a. Prepare an entry to record the issue of materials into production and post the entry to appropriate T-accounts. (In the case of direct materials, it is not necessary to make a separate entry for each job.) Indirect materials used during December totalled $4,450. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare an entry to record the incurrence of labour cost, and post the entry to appropriate T-accounts. (In the case of direct labour cost, it is not necessary to make a separate entry for each job.) Indirect labour cost totalled $8,600 for December. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
c. Prepare an entry to record the incurrence of $19,810 in various actual manufacturing overhead costs for December (credit Accounts Payable). Post this entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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