Modern Building Solutions builds portable buildings to clients specific cations. The firm has two departments: Parts Fabrication and Assembly. Th e Parts Fabrication Department

designs and cuts the major components of the building and is highly automated. The

Assembly Department assembles and installs the components, and this department is highly labour intensive. The Assembly Department begins work on the buildings as soon as the floor components are available from the Parts Fabrication Department.

In its first month of operations (March 2010), Modern Building Solutions obtained

contracts for three buildings:

Job 1: a 20- by 40-foot storage building

Job 2: a 35- by 35-foot commercial utility building

Job 3: a 30- by 40-foot portable classroom

Modern Building Solutions bills its customers on a cost-plus basis, with profit t set equal

to 25 percent of costs. Th e fi rm uses a job order costing system based on normal costs.

Overhead is applied in Parts Fabrication at a predetermined rate of $100 per machine hour

(MH). In the Assembly Department, overhead is applied at a predetermined rate of $10 per direct labour hour (DLH). Th e following significant transactions occurred in March 2010:

1. Direct material was purchased on account: $100,000.
2. Direct material was issued to the Parts Fabrication Department for use in the three

jobs: Job #1, $10,000; Job #2, $25,000; and Job #3, $47,000. Direct material was issued to

the Assembly Department: Job #1, $700; Job #2, $2,500; and Job #3, $7,800.

3. Time sheets and payroll summaries indicated that the following direct labor costs were

incurred:

	Parts Fabrication Department	Assembly Department
Job #1	$1,300	$2,500
Job #2	3,400	3,700
Job #3	5,500	9,600

4. Th e following indirect costs were incurred in each department:

	Parts Fabrication Department	Assembly Department
Labor	$ 4,200	$4,700
Utilities/Fuel	5,900	2,500
Depreciation	10,300	3,800

Th e labor and utilities/fuel costs were accrued at the time of the journal entry.

5. Overhead was applied based on the predetermined rates in eff ect in each department.

Th e Parts Fabrication Department had 200 MHs (20 MHs on Job #1, 35 MHs on Job

#2, and 145 MHs on Job #3), and the Assembly Department worked 950 DLHs (40

DLHs on Job #1, 110 DLHs on Job #2, and 800 DLHs on Job #3) for the month.

6. Job #1 was completed and sold for cash in the amount of the cost-plus contract. At

month-end, Jobs #2 and #3 were only partially complete.

Required:

a. Record the journal entries for transactions 16.