Job Order Cost Accumulation and Accounting for Factory Overhead. The Clementon Manufacturing Company builds construction machinery to customer specifications. On December 31, the following inventories appeared on the company's balance sheet:
|
Materials and factory supplies
|
$32,300
|
|
Work in process
|
55, 1 1
|
|
Finished goods
|
14,800
|
The work in process consisted of two partly completed construction jobs: Jobs No. LP4422 and OK.5000 on which these costs had been incurred in previous months:
|
Job No.
|
Materials
|
Labor
|
Factory Overhead
|
Total
|
|
LP4422
|
$14,800
|
$12,300
|
$10,455
|
$37,555
|
|
OK5000
|
7,200
|
5,600
|
4,760
|
17,560
|
|
$22,000
|
$17,900
|
$15,215
|
$55,115
|
The finished goods inventory consisted of one job: Job No. DU3750. The company has always applied factory overhead on a rate based on direct labor cost. Fluctuating labor costs and an attempt to attain greater control over indirect costs have led management to set up an overhead rate based-X) indirect labor hours. The cost department estimates the total factory overhead for next year at $135,000 for 75,000 direct labor hours,
In January two new orders were started: No. MA4440 and No. HA5001. For these two orders and the other work in process, the following costs were incurred during January:
|
Job No.
|
Materials Cost
|
Labor Hours and Cost
|
|
LP 4422
|
$2,300
|
825
|
$1,980
|
|
OK 5000
|
5,300
|
2,000
|
4,500
|
|
MA4440
|
11,200
|
2,600
|
5,980
|
|
HA 5001
|
9,280
|
2,400
|
5,400
|
During January $16,400 of materials and factory supplies were purchased. The January 31 inventory of materials and supplies was $17,040. The factory payroll for the monthjiitakd_,$20,834. Other factory overhead costs for the month were:
|
Power
|
$ 400
|
Repairs
|
$3,200
|
|
Depreciation
|
1,600
|
Taxes
|
350
|
|
Insurance
|
900
|
|
|
Jobs LP4422 and OK5000 were completed and billed at $75,000 and $52,000. ( Jobs MA4440 and HA5001 were still in process on January 31.
Required:
(1) The overhead rate used for the application of overhead to the jobs in process on December 31.
(2) The new overhead rate based on estimated direct labor hours.
(3) The journal entry to apply factory overhead to all jobs worked on during January (in total, not individual jobs).
(4) The amount of over or underapplied factory overhead for January.
(5) The total cost and the gross profit on Jobs LP4422 and OK5000.
(6) The amount of the work in process inventory on January 31.