Water Wonders, Inc., makers of custom-made Jet Skis, the company has been in operations since May 2, 1987. Due to increase acceptability the company has also started to take customized orders. The company has completed Job 500 on March 31, and there were no jobs in process in the plant. Prior to April 1, the predetermined overhead application rate for April was computed from the following data,

based on an estimate of 40,000 direct labor hours:

Estimated variable factory overhead $100,000

Estimated fixed factory overhead $200,000

Total estimated factory overhead $300,000

The factory has one production department, and the direct labor hour method is used 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 the amounts posted to the job cost sheets:
Job Date Started Direct Materials Direct Labor Direct Labor Hours

401 April 2 $100,000 $120,000 12,000

402 April 12 200,000 250,000 18,000

403 April 15 80,000 75,000 8,000

The actual factory overhead expenses are $325,000. On April 11, Job 401 was completed and delivered to the customer at a markup of 25% on manufacturing cost. On April 24, Job 402 was completed and transferred to Finished Goods. On April 30, Job 403 was still in process.

Required:
a) Calculate the cost for Jobs 401, 402, and 403, including factory overhead applied when the job was completed or at the end of the month for partially completed jobs.

b) Prepare journal entries as of April 30 for the following:
a. Transferring the cost of the completed jobs to Finished Goods.
b. Recording the cost of the sale and the sale of Job 401
c. Analyze the current situation of the company?

Answer rating: 100% (QA)

Question Ques 1 Direct Materials Direct Labor Appli... View the full answer