Information on Kwon Manufacturing’s activities for its first month of operations follows:

 Information on Kwon Manufacturing’s activities for its first month of operations follows:
 
Purchased $100,000 of raw materials on credit.
Materials requisitions show the following materials used for the month.
 

Job 201    $ 48,200
Job 202    23,600
Total direct materials    71,800
Indirect materials    8,620
Total materials used    $ 80,420
 

Time tickets show the following labor used for the month.
 

Job 201    $ 39,200
Job 202    12,600
Total direct labor    51,800
Indirect labor    24,200
Total labor used    $ 76,000
 

Applied overhead to Job 201 and to Job 202 using a predetermined overhead rate is 80% of direct materials cost.
Transferred Job 201 to Finished Goods Inventory.
(1) Sold Job 201 for $163,760 on credit. (2) Record cost of goods sold for Job 201.
Incurred the following actual other overhead costs for the month.
 

Depreciation of factory equipment    $ 32,000
Rent on factory building (payable)    500
Factory utilities (payable)    800
Expired factory insurance    3,000
Total other factory overhead costs    $ 36,300
1. Prepare a job cost sheet for Job 201 and for Job 202 for the month.

2. Compute gross profit on the sale of Job 201.

 

Applied overhead to Job 201 and to Job 202 using a predetermined overhead rate is 80% of direct materials cost.
Transferred Job 201 to Finished Goods Inventory.
(1) Sold Job 201 for $163,760 on credit. (2) Record cost of goods sold for Job 201.
Incurred the following actual other overhead costs for the month.
 

Depreciation of factory equipment    $ 32,000
Rent on factory building (payable)    500
Factory utilities (payable)    800
Expired factory insurance    3,000
Total other factory overhead costs    $ 36,300
Prepare journal entries to record the transactions reflected in items a through g.
 

 

Explanation
d. Apply overhead to jobs at the rate of 80% of direct materials cost: $71,800 × 0.80 = $57,440

Post entries for transactions a through g to the T-accounts. Each of T-accounts started the month with a zero balance.

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