Question
Log Cabin Homes, Inc., uses a job cost system to account for its jobs, which are prefabricated houses. As of January 1, 2019, its records
Log Cabin Homes, Inc., uses a job cost system to account for its jobs, which are prefabricated houses. As of January 1, 2019, its records showed inventories as follows:
Materials and supplies $ 100,000
Work in process (Job Nos. 22 and 23) 180,000
Finished goods (Job No. 21) 140,000
The work in process inventory consisted of two jobs:
Job No. Direct Materials Direct Labor Mfg. Overhead Total
22 $ 36,000 $ 40,000 $ 20,000 $ 96,000
23 40,000 28,000 16,000 84,000
$ 76,000 $ 68,000 $ 36,000 $180,000
Cost and sales data for 2019:
1.Materials purchased on account, $400,000.
2.Direct materials used: Job No. 22, $60,000; Job No. 23, $120,000; Job No. 24, $180,000. Indirect materials used, $10,000.
3.Direct labor costs: Job No. 22, $100,000; Job No. 23, $200,000; and Job No. 24, $80,000. Indirect labor costs, $80,000.
4.Overhead is assigned to jobs at $100 per machine-hour. Job No. 22 used 500 machine-hours, Job No. 23 used 1,000 machine-hours, and Job No. 24 used 300 machine-hours in January.
5.Job Nos. 22 and 23 were completed and transferred to Finished Goods Inventory.
6.Job Nos. 21 and 22 were sold on account for $1,200,000, total.
7.Manufacturing overhead costs incurred, other than indirect materials and indirect labor, were depreciation, $80,000, and heat, light, power, miscellaneous, $40,000.
a.Create journal entries (using the T-account format) to assign the preceding costs to jobs, and be sure to establish the beginning balance in the T-account.(See sample T-account format below).
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