Kenworth Company uses a job-order costing system
by | Mar 18, 2020 | Uncategorized
Problem 5-21 T-Accounts; Overhead Rates; Journal Entries [LO3, LO4, LO5, LO7]
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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:
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| |
Job Cost Sheet |
|
|
| |
Job 105 |
Job 106 |
Job 107 |
| November costs incurred: |
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|
|
|
|
|
|
|
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| Direct materials |
$ |
20,100 |
|
$ |
12,900 |
|
$ |
0 |
|
| Direct labour |
$ |
16,600 |
|
$ |
10,600 |
|
$ |
0 |
|
| Manufacturing overhead |
$ |
24,900 |
|
$ |
15,900 |
|
$ |
0 |
|
| December costs incurred: |
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|
|
|
|
|
|
|
|
| Direct materials |
$ |
0 |
|
$ |
10,000 |
|
$ |
28,500 |
|
| Direct labour |
$ |
6,700 |
|
$ |
7,800 |
|
$ |
13,600 |
|
| Manufacturing overhead |
|
? |
|
|
? |
|
|
? |
|
|
|
| The following additional information is available: |
| a. |
Manufacturing overhead is applied to jobs on the basis of direct labour cost. |
| b. |
Balances in the inventory accounts at November 30 were as follows: |
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|
| Raw Materials |
$ |
50,800 |
|
| Work in Process |
|
? |
|
| Finished Goods |
$ |
103,000 |
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| 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.
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| 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 $6,700. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)
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