Liberty ACCT 212 Chapter 2 Homework Answers Complete Solutions
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As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.
Job 102 was started in production in May, and the following costs were assigned to it in May: direct materials, $10,000; direct labor, $4,000; and overhead, $1,600. Jobs 103 and 104 were started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 were finished in June, and Job 104 is expected to be finished in July. No raw materials were used indirectly in June. Using this information, answer the following questions. (Assume this company’s predetermined overhead rate did not change across these months.)
1&2. Complete the table below to calculate the cost of the raw materials requisitioned and direct labor cost incurred during June for each of the three jobs?
3. Using the accumulated costs of the jobs, what predetermined overhead rate is used?
4. How much total cost is transferred to finished goods during June?
Starr Company reports the following information for August.
Prepare journal entries to record the following events.
1. Raw materials purchased.
2. Direct materials used in production.
3. Direct labor used in production.
4. Applied overhead.
Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $6,300, direct labor of $3,000, and applied overhead of $2,700. Custom Cabinetry applies overhead at the rate of 90% of direct labor cost. During July, Job 120 is sold (on account) for $28,500, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July.
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1. Prepare journal entries for the following in July.
Direct materials used in production.
Direct labor used in production.
The sale of Job 120.
Cost of goods sold for Job 120.
2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)
Prepare summary journal entries to record the following transactions for a company in its first month of operations.
Raw materials purchased on account, $102,000.
Direct materials used in production, $42,500. Indirect materials used in production, $15,000.
Paid cash for factory payroll, $55,000. Of this total, $37,000 is for direct labor and $18,000 is for indirect labor.
Paid cash for other actual overhead costs, $8,375.
Applied overhead at the rate of 125% of direct labor cost.
Transferred cost of jobs completed to finished goods, $72,600.
Sold jobs on account for $104,000. The jobs had a cost of $72,600.
The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.
Compute the following amounts for the month of May using T-accounts.
1. Cost of direct materials used.
2. Cost of direct labor used.
3. Cost of goods manufactured.
4. Cost of goods sold.*
5. Gross profit.
6. Overapplied or underapplied overhead.
Prepare journal entries for the above transactions for the month of May.