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Stine Company uses a job order cost system
Stine Company uses a job order cost system.
On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500.
During May, a summary of source documents reveals the following.
|
Job Number |
Materials Requisition Slips |
Labor Time Tickets |
|||
|
429 |
2,500 |
1,900 |
|||
|
430 |
3,500 |
3,000 |
|||
|
431 |
4,400 |
10,400 |
7,600 |
12,500 |
|
|
General use |
800 |
1,200 |
|||
|
11,200 |
13,700 |
||||
Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month.
Instructions
(a) Prepare FOUR summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of mfg overhead to jobs, and (4) the completion of Job No. 429.
(b) Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets. (Use a T-account.)
|
Materials |
|||
|
Labor |
|||
|
Overhead |
|||
|
Overhead |
|||
Expert Solution
Solution:
a.)
| No. | Date | Account Titles and Explanation | Debit |
Credit |
| i | May, 31 | Work-in-process Inventory | $ 10,400 | |
| Manufacturing Overhead | $ 800 | |||
| Raw Material Inventory | $ 11,200 | |||
| ii | May, 31 | Work in Process Inventory | $ 12,500 | |
| Manufacturing Overhead | $ 1,200 | |||
| Factory Labor | $ 13,700 | |||
| iii | May, 31 | Work in Process Inventory | $ 7,500 | |
| Manufacturing Overhead | $ 7,500 | |||
| iv | May, 31 | Finished Goods Inventory | $ 7,540 | |
| Work in Process Inventory | $ 7,540 |
b.)
| May, 1 | $ 3,500 | May, 31 | $ 7,540 |
| May, 31 | $ 10,400 | ||
| May, 31 | $ 12,500 | ||
| May, 31 | $ 7,500 | ||
| May, 31 Balance | $ 26,360 | ||
.
| Job | Beginning Work in Process | Direct Material | Direct Labor | Manufacturing Overhead | Total |
| 430 | 1,500 | 3,500 | 3,000 | 1,800 | 9,800 |
| 431 | - | 4,400 | 7,600 | 4,560 | 16,560 |
| 1,500 | 7,900 | 10,600 | 6,360 | 26,360 |
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