Perry Company employs a job-order costing system. Only three jobs-Job #205, Job #206, and Job #207-were worked
Question:
Perry Company employs a job-order costing system. Only three jobs-Job #205, Job #206, and Job #207-were worked on during January and February. Job #205 was completed February 10; the other two jobs were still in production on February 28, the end of the company's operating year. Job cost sheets on the three jobs follow:
| Job Cost Sheet | ||||
| Job #205 | Job #206 | Job #207 | ||
| January costs incurred: | ||||
| Direct material | P16,500 | P 9,300 | P | |
| Direct labor | 13,000 | 7,000 | ||
| Manufacturing overhead | 20,800 | 11,200 | ||
| February costs incurred: | ||||
| Direct materials | 8,200 | 21,300 | ||
| Direct labor | 4,000 | 6,000 | 10,000 | |
| Manufacturing overhead | ? | ? | ? |
The following additional information is available:
| a. | Manufacturing overhead is assigned to jobs on the basis of direct labor cost. |
| b. | Balances in the inventory accounts at January 31 were as follows: |
| Raw Material | P40,000 |
| Work in Process | ? |
| Finished Goods | 85,000 |
Required:
| a. | Prepare journal entries forFebruaryas follows: |
| 1. | Prepare an entry to record the issue of materials into production. (In the case of direct material, it is not necessary to make a separate entry for each job.) Indirect materials used during February totaled P4,000.
|
| 2. | Prepare an entry to record the incurrence of labor cost (In the case of direct labor, it is not necessary to make a separate entry for each job.) Indirect labor cost totaled P8,000 for February.
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| 3. | Prepare an entry to record the incurrence of P19,000 in various actual manufacturing overhead costs for February (credit Accounts Payable). |
| b. | 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 February (it is not necessary to make a separate entry for each job). |
| c. | As stated earlier, Job #205 was completed during February. Prepare a journal entry to show the transfer of this job off of the production line and into the finished good warehouse. |
| d. | Determine the balance at February 28 in the Work in Process inventory account. How much of this balance consists of the cost of Job #206? Job #207? |
Expert Answer:
a Prepare journal entries for February 1 Entry to record the issue of materials into production Debi... View the full answer
