Question

Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $8,700, direct labor of $3,800, and applied overhead of $3,230. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on account) for $23,500, 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. July Product Costs Job 120 Job 121 Job 122 Total Direct materials $ 2,100 $ 6,400 $ 3,400 $ 11,900 Direct labor 2,300 4,200 2,300 8,800 Overhead applied ? ? ? ?

1. Prepare journal entries for the following in July.
2. Direct materials used in production.
3. Direct labor used in production.
4. Overhead applied. The sale of Job 120.
e. Cost of goods sold for Job 120. 2.
Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

Answer 1

Answer and Explanation:

Cost Schedule:

Product Costs Job 120 Job 121 Job 122 Total

Beginning WIP 15700 15700

Direct Materials 2100 6400 3400 11900

Direct Labor 2300 4200 2300 8800

Overhead 85% 1955 3570 1955 7480

of Direct Labor

Total 22055 14170 7655 43880

Jounral Entries

Work in Process Inventory 11900

Raw Materials Inventory 11900

To record materials in inventory

Work in Process Inventory 8800

Wages Payable 8800

To record Labor cost

Work in Process Inventory 7480

Applied Factory Overhead 7480

To record applied FOH

Accounts Receivable 23,500

Sales Revenue 23,500

To record Job sold on account

Cost of Goods Sold (Job 120) 22055

Finished goods 22055

To record cost of goods sold

Ending Work in Process account = 7655

Ending Finished Good account = 14170