Question

ACO2 Lamar Manufacturing uses a job order cost accounting system. On May 1, the company has a balance in Work in Process Inventory of $3,200 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,200. During May, a summary of source documents reveals the following. Materials Requisition Slips Labor Time Tickets Job Number 429 430 431 General use $2,500 3,600 4,400 $2,200 3,000 7,600 $10,500 1,800 $12,300 $12,800 1,950 $14,750 Lamar Manufacturing applies manufacturing overhead to jobs at an overhead rate of 80% of direct labour cost. Job No. 429 is completed during the month. Instructions (a) Prepare summary journal entries to record: (i) the requisition slips, (ii) the time tickets, (iii) the assignment of manufacturing overhead to jobs, and (iv) 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.

Answer 1

solution: a) summary Journal Entries; No Date W May I Account Titles and Explanation work in progress Inventory Manufacturing overhead Raw Material Inventory (to record materials used in may) Debit(s) clebit (6) $10,500 $ 1,900 $125300 (ii) may $12,800 $ 1,990 sluitso! work in progress Inventory Manufacturing overhead .. Factory Labour (wages payable (to record Labour hours spent on jobs in may) work in progress Inventory Manufacturing overhead (to record overhead Cost assigned to jobs in progress in may) (iii) . may $10,240 31 $ 12, 240

(iv) may finished Goods Inventory $8,460 31 work in progress Inventory $8,460 (to record the completion of Job no. 129) Explanation" (iii) The will asset inventory asset increases with the overnecio incurred => $12,800x80%. -> $ 10.200 (iv). The cost of Job 429 IS! Beginning WIP $ 2,000 Direct material added this month : $.2,500 Direct Labour added this month $ 2,200 overhead cost assigned this month . $ 11760 .($2,200x807) Total cost $8,460

Work in process Inventory May 31 Beginning $3,200 may 31 sob completed 4 2 460 B Balance May 31 direct $10.500 Materials May 31 Direct Labour $12,800 May 31 overhead $10,2uo I applied May 31 Ending Balance $28,280 Job cost sheets!: Job Beginning Balance Direct Materials Direct Laboy overhees applies Total cost ! to date Job 430 $1,200 $3,600 $31000 Jab 431 Shihoo $1,600 - $10,600 $2,400 $10,200 (53.000 43001) $6680 $18,080 ($Tb00x801) 12,2100 $23,290 All sobs in Process $1,200 $3,000
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