Question

Stellar Sound, Inc. which uses a job-order costing system, had two jobs in process at the start of 20x1: job no. 64 ($84,100) and job no. 65 ($53,300). The following information is available:

a. The company applies manufacturing overhead on the basis of machine hours (based on practical capacity). Budgeted overhead and machine activity for the year were anticipated to be $840,000, and 16,000 hours, respectively.

b. The company worked on four jobs during the first quarter. Direct materials used, direct labor incurred, and machine hours consumed were as follows:

Job No.	Direct Material			Direct Labor			Machine Hours
64	$	21,000		$	35,000			1,200
65		—			22,000			700
66		44,000			65,000			2,000
67		15,000			8,800			500

c. Manufacturing overhead during the first quarter included charges for depreciation ($33,000), indirect labor ($60,100), indirect materials used ($5,200), and other factory costs ($139,600).

d. Stellar Sound completed job no. 64 and job no. 65. Job no. 65 was sold on account, producing a profit of $34,700 for the firm.

Problem 3-45 Part 2

2. Prepare journal entries as of March 31 to record the following. (Note: Use summary entries where appropriate by combining individual job data.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

e. The sale of job no. 65.

• Record transfer of job cost from work in progress to finished goods inventory.

	Transaction General Journal Debit Credit d. Finished-goods inventory ? Work-in-process inventory ?

Answer 1

Given
	job no 64	job no 65
opening WIP	84100	53300
Budgeted OH	$840,000
budgeted machine hours	16000hrs
During the year

Manufacturing OH
dep	33000
indirect labour	60100
indirect material	5200
other factory cost	139600
total	237900

Solution

transaction	General entry	debit	credit
e.	Bank   A/c dr…	146750
	To sales A/c ……		146750

working
job no 65	Amount (in $)
opening WIP	53300
Add: current year expense
Labour	22000
manufcaturing OH	36750
total cost	112050
Add :profit	34700
Total sales	146750

manug OH = 52.5*700hrs

machine hour rate

($840000/16000 hrs)

52.5

transaction	General entry	debit	credit
d	Finished goods inventory	203100
	To opening WIP		84100
	To WIP		119000

working

job no 64
opening WIP	84100
Add: current year expense
Material	21000
Labour	35000
Manufacturinh OH	63000
total cost	203100

MAnufacturing Oh = 52.5*1200 hrs.