The company issued 100,000 shares of common stock for $1.00 per share.
The company purchased $20,000 of raw materials on account.
Raw materials: allocated $4,000 to job 101, $7,000 to job 102, & $5,000 to job 103.
Enter these values on the job cost sheets.
Direct Labor for each job: Job 101: $9,000; Job 102: $6,000; Job 103: $5,000.
Enter these values on the job cost sheets.
Actual manufacturing overhead incurred and accrued as a payable was $14,000 plus $3,000 of Accumulted depreciation. (Do not record on job sheets)
Manufacturing Overhead is applied at a rate of 80% of direct labor cost.
(80% of $20,000 is $16,000). Apply at the same rate on each job cost sheet.
Jobs 101 and 102 were finished and moved to Finished Goods.
Job 101 was sold to a customer. The price is set at twice the cost of the job.
The cost of job 101 is moved to Cost of Goods Sold.
Note that the Manufacturing Overhead has an ending debit balance of $1,000.
This is because the Predetermined Overhead Rate of 80% of direct labor cost
did not accurately predict the actual amount of overhead incurred.
At the end of the year, this balance in the MO account must be closed to COGS.