Question: Floyd s Auto Repair Shop uses a job order cost system

Floyd’s Auto Repair Shop uses a job order cost system to track the cost of each repair. Floyd’s
applies its garage or shop overhead at a rate of $20 per direct labor hour spent on each repair.
Floyd’s uses the following accounts to track the cost of all repairs:

The following transactions occurred during the most recent month:
(a) Purchased raw materials (parts and supplies) on account $16,000.
(b) Used $14,000 in raw materials (parts and supplies). Of this, $10,000 was for major parts that were traceable to individual repair jobs, and the remainder was for incidental supplies such as lubricants, rags, fuel, and so on.
(c) Recorded a total of $12,000 in direct labor cost (for 500 hours) that are owed but not yet paid.
(d) Applied overhead to repair jobs at a rate of $20 per direct labor hour.
(e) Recorded the following actual overhead costs:
Rent on garage (pre-paid in the prior month) ... .$8,000
Depreciation on repair equipment ........ 2,500
Garage supervisor’s salary (owed but not yet paid) . 4,000

(f) Completed repair jobs costing $40,000 and charged customers at cost plus an additional 30 percent.

Prepare journal entries for transactions (a)–(f) using the account names shown and other appropriate accounts such as Cash, Payables, Accumulated Depreciation, Prepaid, and SalesRevenue.

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  • CreatedFebruary 27, 2015
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