Question

Exercise 4-53: To prepare journal entries for the month of July with the following CHANGES. First, assume that the company uses a plantwide overhead rate based on direct labor dollars. Also assume that estimated information for the year includes Direct labor dollars of $1,642,000. Finally, assume that the company sells its jobs at a selling price equal to (cost + 25% of cost markup).

Heurion Company is a job- order costing firm that uses a plantwide overhead rate based on direct labor hours. Estimated information for the year is as follows:

                                                           Overhead 789,000

                                                            direct Labor hours: 100,000

Heurion worked on five jobs in July. Data are as follows:

                                                          Job 741                Job 742          Job 743         Job 744         Job 745

Balance July 1                                   29, 870                 55,215              27,880               0                  0

Direct Materials                                  25,500                  39,800               14,450            13,600           8,420

Direct labor cost                                61,300                     48,500              28, 700          24, 500            21,300

direct labor hours                               4,000                       3400                  1980              1600              1400

By July, Jobs 741 and 743 were completed and sold. The remaining jobs were in process

1. Calculate the plantwide overhead rate for Heurion Company (Note: Round to the nearest cent)

2. Prepare job-order cost sheets for each job showing all costs through July 31 (Note: Round all amounts to the nearest dollar)

3. Calculate the balance in Work in Process on July 31

4. Calculate Cost of Goods Sold for July

Answer 1

1. Plantwide Overhead rate = $789000 / 100000 = $7.89 per DLH

2.

	Job 741	Job 742	Job 743	Job 744	Job 745	Total
Beg Work in Process	$        29,870	$          55,215	$        27,880	$                    -	$                    -	$         112,965
Direct Material	$        25,500	$          39,800	$        14,450	$           13,600	$              8,420	$         101,770
Direct Labor	$        61,300	$          48,500	$        28,700	$           24,500	$           21,300	$         184,300
Overhead Applied	$        31,560	$          26,826	$        15,622	$           12,624	$           11,046	$           97,678
Total	$     148,230	$        170,341	$        86,652	$           50,724	$           40,766	$         496,713

3.
Balance of Work in Process = $170341+50724+40766 = $261,831

4.
Cost of Goods Sold = $148230+86652 = $234,882

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