Question

A job order cost sheet for Ryan Company is shown below. Job No. 92 Direct Materials Direct Labor For 2,000 Units Manufacturing Overhead 4,900 Date 7,000 Beg. bal. Jan. 1 8 6,000 7,000 12 10,000 8,500 25 2,500 27 4,000 3,400 16,800 15,500 21,000 Cost of completed job: Direct materials Direct labor Manufacturing overhead Total cost Unit cost ($53,300 = 2,000) $15,500 21,000 16,800 $53,300 $26.65 (a) On the basis of the foregoing data, answer the following questions. (1) What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job? Balance in Work in Process Inventory on January 1 $ (2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (Round answers to 0 decimal places, e.g. 55%.) Last year Current year Overhead rate % % (b) Prepare summary entries at January 31 to record the current year's transactions pertaining to Job No. 92. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation Jan. 31 (To record raw materials used) 31 (To record factory labor used) 31 (To record manufacturing overhead) 31 (To record job completed)

Answer 1

Ans-1

If this was the only unfished job then WIP Inventory as on 1st January would have been :

Amount 6000 Cost Component Opening Direct Material Opening Direct Labour Opening O/H 7000 4900 17900

Ans-2

Last Year rate = 4900/7000 = 70% of Labour Cost

Current Year rate = (8500+3400)/(10000 + 4000) = 11900/14000 = 85%

Ans-3

DEBIT CREDIT 9500 Date DETAILS 31-Jan Work in Process Inventory Raw Material Inventory (Raw materials consumed on job in current period) 9500 14000 31-Jan Work in Process Inventory Direct Labour (Labour cost on job in current period) 14000 11900 31-Jan Work in Process Inventory Overhead Charges (Overhead cost on job in current period) 11900 53300 31-Jan FG Inventory Work in Process Inventory (On completion FG accounted) 53300