PROBLEM IV

Derby Music Company specializes in producing and packaging compact discs (CDs) for the music recording industry. Derby use a job order cost system. The following data summarize the operations related to production for March, the first month of operations:

a. Materials purchased on account. $15,500.

b. Materials requisitioned and labor used.

?Materials?Factory Labor

Job No. 100?$2,650?? $1,770

Job No. 101? 1,240?? 650

Job No. 102? 980?? 420

Job No. 103? 3,420?? 1,900

Job No. 104? 1,000?? 500

Job No. 105? 2,100?`?? 1,760

For general factory use? 450?? 650

c. Factory overhead costs incurred on account. $2,700

d. Depreciation of machinery. $1,750

e. Factory overhead is applied at a rate of 70% of direct labor cost.

f. Jobs completed: Nos. 100, 101, 102, 104

g. Jobs 100, 101, 102 were shipped and customers were billed for $8,100, $3,800 and $3,500 respectively.

INSTRUCTIONS

1. Journalize the entries to record the transactions indentified above.

2. Determine the account balances for Work in Process and Finished Goods.

3. Prepare a schedule of unfinished jobs to support the balances in the work in process account

4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.