Need help with Problem 2-1B ty Part D

Prob 2-1B(Only Aproblems are in your book; B problems are only below)

Pedriani Company uses a job order cost system and applies overhead on the basis of direct labor hours. On Jan01, 2017, Job No. 25 was the only job in process. Costs incurred prior to Jan01 on this job were as follows: direct materials $10,000; direct labor $6,000; and manufacturing overhead $9,000. Job No. 23 had been completed at a cost of $42,000 and was part of finished goods inventory. There was a $5,000 balance in the Raw Materials Inventory account.

During the month of January, the company began production on Jobs 26 and 27, and completed Jobs 25 and 26. Jobs 23 and 25 were sold on account during the month for $63,000 and $74,000, respectively. These additional events occurred during the month.

1.Purchased additional raw materials of $45,000 on account.

2.Incurred factory labor costs of $33,500. Of this amount, $7,500 related to employer payroll taxes.

3.Incurred manufacturing overhead costs: indirect materials $10,000; indirect labor $9,500; deprec. expense on equipment $12,000; and various other manufacturing overhead costs on account $11,000.

4.Assigned direct materials and direct labor to jobs as follows.

Job No.	Direct Materials	Direct Labor
25	$ 5,000	$ 3,000
26	17,000	12,000
27	13,000	9,000

5.Company uses direct labor hours as the activity base to assign overhead. Direct labor hours incurred on each job were: Job #25, 200; Job #26, 800; and Job #27, 600.

Instructions

(a) Calculate the predetermined overhead rate for the year 2017, assuming Company

estimates total manufacturing overhead costs of $440,000, direct labor costs of

$300,000, and direct labor hours of 20,000 for the year. Note: Use Direct Labor

Hours to calculate the predetermined overhead rate.

(b) Open job cost sheets for Jobs 25, 26, and 27. Enter the January 1 balances on the

job cost sheet for Job No. 25. (Completed for you)

(c) Prepare entries to record: purchase of raw materials, factory labor costs incurred,

and the manufacturing overhead costs incurred during the month of JAN.

(d) Prepare entries to record the assignment of direct materials, direct labor, and mfg

overhead costs to production. (In assigning overhead, use the rate calculated in a).

Post all costs to the job cost sheets as necessary .

(e) Total the job cost sheets for any job(s) completed during the month.

Prepare the entry (or entries) to record the completion of any job(s) during JAN.

(f) Prepare journal entry (or entries) to record the sale of any job(s) during JAN.

(g) What is the balance in the Work in Process Inventory account at the end of JAN?

(h) What is the amount of over- or underapplied overhead?

(a)

(Your answer should be in dollars per hour NOT a percentage)

(b) See solution to part (e) for job cost sheets

(c)	From #1 erase this.
Labor	From #2 erase this.
Mfg Overhead	From #3 erase this.

From #4

(d)

(e)

Job # 25
Date	Direct Materials	Direct Labor	Manufacturing Overhead
Beg	10,000	6,000	9,000
Jan
Total
Total Cost of Job

Job # 26
Date	Direct Materials	Direct Labor	Manufacturing Overhead
Beg	--	--	--
Jan
Total
Total Cost of Job

Job # 27
Date	Direct Materials	Direct Labor	Manufacturing Overhead
Beg	--	--	--
Jan

* $22 x 600 dir lbr hr.

(e) continued journal entry for completion of jobs in JAN

(e)

Remember back to Fin Acc. Selling requires TWO entries each with a different amount.

1) for SALE itself on credit. The other reduces INV and recognizes CGS

(f)

(g)	(T account)	Work in Process		(T account)
	Beginning balance Direct materials Direct labor Manufacturing overhead	35,200	84,000	Cost of completed jobs 25 and 26
	Ending balance	35,200

The balance in this account consists of the current costs assigned to Job No. 27:

Direct Materials. $13,000

Direct Labor 9,000

Manufacturing Overhead 13,200

Total costs assigned $35,200

(h)	Manufacturing Overhead		(T account)
	Actual (debit)	Applied (credit)
Bal

(Indicate either underapplied or overapplied below)

The balance in the Manufacturing Overhead account is:

underapplied or overapplied. (Indicate one or the other)