Orbit Products Inc. completed Job 2525 on May 31, and there were no jobs in process in
Question:
Orbit Products Inc. completed Job 2525 on May 31, and there were no jobs in process in the plant. Prior to June 1, the predetermined overhead application rate for June was computed from the following data, based on an estimate of 5,000 direct labor hours:
Estimated variable factory overhead. . . . . . . . . . . . . . . . . . . . . . $20,000
Estimated fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . 10,000
Total estimated factory overhead. . . . . . . . . . . . . . . . . . . . . . . $30,000
Estimated variable factory overhead per hour . . . . . . . . . . . ... $ 4
Estimated fixed factory overhead per hour . . . . . . . . . . . . . . . .. 2
Predetermined overhead rate per direct labor hour. . . . ... $6
The factory has one production department and uses the direct labor hour method to apply factory overhead.
Three jobs are started during the month, and postings are made daily to the job cost sheets from the materials requisitions and labor-time records. The following schedule shows the jobs and amounts posted to the job cost sheets:
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The factory overhead control account was debited during the month for actual factory overhead expenses of $27,000. On June 11, Job 2526 was completed and delivered to the customer at a markup of 50% on manufacturing cost. On June 24, Job 2527 was completed and transferred to Finished Goods. On June 30, Job 2528 was still in process.
Required:
1. Prepare job cost sheets for Jobs 2526, 2527, and 2528, including factory overhead applied when the job was completed or at the end of the month for partially completed jobs.
2. Prepare journal entries as of June 30 for the following:
a. Applying factory overhead to production.
b. Closing the applied factory overhead account.
c. Closing the factory overhead account.
d. Transferring the cost of the completed jobs to finished goods.
e. Recording the cost of the sale and the sale of Job2526.
Step by Step Answer:
1 Job 2526 Materials 5000 Labor 10000 Applied factory overhead 1600 hrs x 6 9600 ...View the full answer
