Polaski Inc. uses an actual cost, job order system. The following transactions a
ID: 2371261 • Letter: P
Question
Polaski Inc. uses an actual cost, job order system. The following transactions are for August 2010. At the beginning of the month, Direct Material Inventory was $ 2,000, Work in Process Inventory was $ 10,500, and Finished Gods Inventory $ 6,500.
- Direct material purchases on account totaled $ 90,000.
- Direct labor cost for the period totaled $ 75,600 for 8,000 direct labor hours; these costs were paid in cash.
- Actual overhead costs were $ 82,000 and are applied on production.
- The ending inventory of Direct Material Inventory was $ 3,500.
- The ending inventory of Work in Process Inventory was $ 7,750.
- Goods costing $ 243,700 were sold for $ 350,400 cash
a. What was the actual OH rate per direct labor hour?
b. Journalize the preceding transactions.
c. Determine the ending balance in Finished Gods Inventory.
Explanation / Answer
A. $82,000 overhead divided by $75,600 = OH Rate of 1.1 B. 1. Direct Materials Inventory, Debit 90,000 Accounts Payable, Credit 90,000 2. Direct Labor, Debit 75,600 Accounts Payable, Credit 75,600 3. Factory Overhead, Debit 82,000 Accounts Payable 82,000 4. Cash, Debit 350,400 Finished Goods Inventory, Debit 243,700 Sales Revenue, Credit 350,400 Cost of Goods Sold, Credit 243,700 C. The ending balance in Finished Goods Inventory is $5,150. (+90,000 and 75,600 and 82,000 of activity + 2,000 DM and 10,500 WIP of beginning balances - 3,500 DM and 7,750 WIP ending balances - 243,700 Cost of Goods Sold = $5,150). If you have any other questions, RATE me and respond.