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 | $ | 20,100 | | $ | 12,900 | | $ | 0 | |
| Direct labour | $ | 16,600 | | $ | 10,600 | | $ | 0 | |
| Manufacturing overhead | $ | 24,900 | | $ | 15,900 | | $ | 0 | |
| December costs incurred: | | | | | | | | | |
| Direct materials | $ | 0 | | $ | 10,000 | | $ | 28,500 | |
| Direct labour | $ | 6,700 | | $ | 7,800 | | $ | 13,600 | |
| 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 | $ | 50,800 | |
| Work in Process | | ? | |
| Finished Goods | $ | 103,000 | |
| |
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.
\begin{tabular}{|c|c|c|c|c|c|c|} \hline \multicolumn{3}{|c|}{ Raw Materials } & \multicolumn{4}{|c|}{ Work in Process } \\ \hline Beg. Bal. & 50,800 & 38,500 & Beg. Bal. & 101,000 & & \\ \hline & & 6,700 & a. & 38,500 & 78,350 & e. \\ \hline End. Bal. & 5,600 & & b. & 42,150 & & \\ \hline & & & d. & 28,100 & & \\ \hline & & & End. Bal. & 53,050 & & \\ \hline \multicolumn{3}{|c|}{ Finished Goods } & \multicolumn{4}{|c|}{ Manufacturing Overhead } \\ \hline Beg. Bal. & 103,000 & & Beg. Bal. & 6,700 & & \\ \hline e. & 78,350 & & a. & & 42,150 & d. \\ \hline \multirow[t]{3}{*}{ End. Bal. } & \begin{tabular}{ll|} 181,350 \\ \end{tabular} & & b. & & & \\ \hline & & & c. & & & \\ \hline & & & End. Bal. & & 35,450 & \\ \hline \multicolumn{3}{|c|}{ Salaries \& Wages Payable } & \multicolumn{4}{|c|}{ Accounts Payable } \\ \hline Beg. Bal. & $28,100 & & Beg. Bal. & $ & & \\ \hline & & & & & & \\ \hline End. Bal. & 28,100 & & End. Bal. & 0 & & \\ \hline \end{tabular} 3-b. Prepare a journal entry to record the application of overhead cost to jobs for December (it is not necessary to make a separate entry for each job). 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.) Journal entry worksheet Record the entry to record the application of overhead cost to jobs for December. 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 $11,600 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 $21,050 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.) 4. As stated earlier, Job 105 was completed during December. Prepare a journal entry to show the transfer of this job off the production line and into the finished goods warehouse. Post the 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.) Journal entry worksheet Record the entry to show the transfer of work in process to finished goods. 2. Prepare journal entries for December as follows: . Prepare an entry to record the issue of materials into production and post the entry to appropriate T-accounts. (In the case of direct naterials, it is not necessary to make a separate entry for each job.) Indirect materials used during December totalled $6,700. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Record the issue of materials into production and Indirect materials used during December totalled $6,700. 3-a. What apparent predetermined overhead rate does the company use to assign overhead cost to jobs
