Farm Equipment, Inc., produces tractors and other farm machinery. Each piece of equipment is built to customer specifications. During May, its first month of operations, Farm Equipment, Inc., began working on three customer orders: jobs 1, 2, and 3. The following transactions occurred during May:
Purchased production materials on account totaling $450,000
Processed material requisitions for the following items:
Job 1 direct materials $77,600
Job 2 direct materials $38,600
Job 3 direct materials $45,000
Indirect materials $87,000
Processed timesheets showing the following:
Job 1 direct labor hours (700 hours) $14,800
Job 2 direct labor hours (550 hours) $11,800
Job 3 direct labor hours (300 hours) $ 6,500
Indirect labor $ 9,700
Applied overhead using a predetermined rate of 160 percent of direct labor cost
Completed job 1 and transferred it to finished goods
Delivered job 1 to the customer and billed her $140,000. (Hint: Two entries are required—one for the cost of the goods and another for the revenue.)
Required: Calculate the production costs incurred in May for each of the three jobs. (Answers must be entered as numbers only. No spaces, dollar signs, commas, decimals, etc. Example: 50000)
Job 1
Job 2
Job 3
Total
Direct Materials
A. $
D. $
G. $
$161,200
Direct Labor
B. $
E. $
H. $
$33,100
Manufacturing Overhead
C. $
F. $
I. $
$52,960
Total Cost Per Job:
$116,080
$69,280
$61,900
$247,260
Using the previous information, make the appropriate journal entry for each item described above. Assume all payments will be made next month. You will use the following accounts at least once: Raw Materials Inventory, Accounts payable, WIP Inventory, Manufacturing Overhead, Raw Materials Inventory, Wages Payable. (Answers must be entered as numbers only. No spaces, dollar signs, commas, decimals, etc. Example: 50000)
05/01/20XX
J.
$450,000
K.
$450,000
Purchased Production Materials on Account
05/XX/20XX
WIP Inventory
L. $
Manufacturing O/head
M. $
Raw materials Inventory
$248,200
Transfer Raw Materials into WIP
05/XX/20XX
WIP Inventory
N. $
Manufacturing Overhead
$9,700
Wages Payable
$42,800
Apply labor costs to Inventory
05/01/20XX
WIP Inventory
$52,960
Manufacturing Overhead
$52,960
Apply Man. Overhead to Inventory costs