Our company makes customized jewelry. Customer 101 orders a ring (job 101). It requires 2.5 grams of 14k gold, 1 diamond, and 1 ruby. Customer 102 orders a pendent (job 102). It requires 2 grams of 14k gold and 2 rubies. Purchasing buys 1,000 grams of 14k gold for $25,000. 10 diamonds for $40,000 & 10 rubies for $18,000. For the month, the company had factory labor costs of $200,000 and 10,000 hours.

a) Enter the journal entry for the purchases/ receiving (by receipt).

b) Enter the journal entry for the direct materials requisitions (by job).

c) Prepare the journal entry for factory payroll.

d) Enter the journal entry for direct labor. Job 101 required 5 hours of labor. Job 102 required 10 hours of labor (by job) (hint: compute the average rate).

e) 15 grams of gold went to indirect materials. Prepare the journal entry.

f) 75 hours of labor went to indirect labor. Prepare the journal entry.

g) Overhead is applied at a rate of 70% of direct materials AND direct labor COSTS. Show the journal entries. (by job)

h) Show the journal entry for the completion of each job.

i) Assume the company has a 50% markup. What is the price of each job?

j) Show Sales, Cost of goods sold and Gross profit in income statement format for the two jobs (by job)?

II. Process Costing

Our company manufactures Chemical X. Assume the company uses a weighted average. Separate direct materials and conversion costs. Chemical X is comprised of two liquids, liquids A and liquid B. The formula of Chemical X is 60% liquid A, 40% liquid B. 75% of the mixed liquid is added at the beginning of the process; 25% is added at the very end. This month, the liquid mix costs $42 per gallon. At the beginning of the month, there was 1,000 gallon in process, 75% through the process. The total costs in beginning Work in process are $20,875 for materials and $20,975 for conversion costs. During the month, 10,000 gallons were started. Conversion costs were $343,000 for the month. Compute direct materials costs (hint use DM EUP under FIFO). At the end of the month, there were 1,500 gallons in process, 70% through the process.

a) How many units were started AND completed? Completed?

b)Using FIFO, calculate equivalent units produced.

c) Using your answer in b. What is the total material cost added this month?

d) Using FIFO, calculate the cost per equivalent unit produced.

e) Using FIFO, what is the journal entry for the transferred to finished goods?

f) Using FIFO, what are the unit costs? (hind: you should have 2 numbers)

g) Using WA, calculate equivalent units of production.

h) Using Wa, what is the cost per equivalent unit of production.

i) Using WA, what is the journal entry for transferred to finished goods?

j) Using WA, what is the cost per unit?