Kenworth Company uses a job-order costing system. Only three jobs-Job 105, Job 106, and Job 107- were

Question:

Kenworth Company uses a job-order costing system. Only three jobs-Job 105, Job 106, and Job 107- were worked on during November and December. Job 105 was completed on December 10; the other two jobs were still in production on December 31, the end of the company's operating year. Data from the job cost sheets of the three jobs follow:

Job Cost Sheet Job 106 Job 105 Job 107 November costs incurred: Direct materials.. Direct labour.... $ 9,300 $ 7,000 $16


The following additional information is available: Manufacturing overhead is applied to jobs on the basis of direct labour cost. Balances in the inventory accounts at November 30 were as follows:Raw Materials..... $40,000 Work in Process Finished Goods. $85,000


Required:

1. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, and Manufacturing Overhead. Enter the November 30 inventory balances given above; in the case of Work in Process, compute the November 30 balance and enter it into the Work in Process T-account. 

2. Prepare journal entries for December as follows:

a. Prepare an entry to record the issue of materials into production, and post the entry to appropriate T-accounts. (In the case of direct materials, it is not necessary to make a separate entry for each job.) Indirect materials used during December totalled $4,000.

b. Prepare an entry to record the incurrence of labour cost, and post the entry to appropriate T-accounts. (In the case of direct labour cost, it is not necessary to make a separate entry for each job.) Indirect labour cost totalled $8,000 for December.

c. Prepare an entry to record the incurrence of $19,000 in various actual manufacturing overhead costs for December (credit Accounts Payable). Post this entry to the appropriate T-accounts. 

3. What apparent predetermined overhead rate does the company use to assign overhead cost to jobs? Using this rate, prepare a journal entry to record the application of overhead cost to jobs for December (it is not necessary to make a separate entry for each job). Post this entry to the appropriate T-accounts.

4. As stated earlier, Job 105 was completed during December. Prepare a journal entry to show the transfer of this job off the production line and into the finished goods warehouse. Post the entry to the appropriate T-accounts.

5. Determine the balance at December 3 I in the Work in Process inventory account. How much of this balance consists of costs charged to Job 106? Job 107?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Managerial Accounting

ISBN: 9781259275814

11th Canadian Edition

Authors: Ray H Garrison, Alan Webb, Theresa Libby

Question Posted: