P3-54B Determine job costs and record journal entries

(Learning Objectives 2, 3, 4, & 6)

Huawei recorded the following transactions for last month. The company had no beginning inventories.

a. Cash purchase of $82,000 in raw materials.

b. Raw materials costing $77,500 were acquired for use in production. This amount included both direct materials and indirect materials as follows:

Raw materials Direct materials.................................................................. $70,000 Indirect materials................................................................ $ 7,500 Total.................................................................................... $77,500

c. Additional manufacturing overhead costs, including depreciation, amounting to

$125,000 were incurred and paid.

d. Total labor wages of $100,000 were incurred and paid for in the month. This amount included both direct labor and indirect labor costs as follows:

Labor cost Direct labor........................................................................ $70,000 Indirect labor...................................................................... $30,000 Total.................................................................................... $100,000

e. Manufacturing overhead costs of $140,000 were applied to the jobs using a predetermined overhead rate.

f. The salary of the company’s finance manager was $10,000.

g. All of the jobs in progress at the end of the month were completed and shipped to customers.

h. Any underallocated manufacturing overhead for the period was closed out to cost of goods sold.

Requirements 1. Record the proper journal entry for each transaction above.

2. Determine the ending balance of the Work in Process Inventory account of the company.

3. Determine Huawei’s cost of goods sold for last month.