The following account appears in the ledger after only part of the postings have
ID: 2380228 • Letter: T
Question
The following account appears in the ledger after only part of the postings have been completed for July, the first month of the current fiscal year:Work in Process
Balance, July 1
60,200
Direct materials
147,000
Direct labor
120,000
Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead incurred for July was $75,000. Jobs completed during the month totaled $301,200.
(a) Prepare the journal entries to record (1) the application of factory overhead to production during July and (2) the jobs completed during July.
(b) What is the balance of the factory overhead account on July 31?
(c) Was factory overhead overapplied or underapplied on July 31?
(d) Determine the cost of the unfinished jobs on July 31.
Explanation / Answer
The following account appears in the ledger after only part of the postings have been completed for July, the first month of the current fiscal year:
Work in Process
Balance, July 1 53,200 |
Direct materials 147,000 |
Direct labor 120,000 |
Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead incurred for July was $75,000. Jobs completed during the month totaled $301,200
.
(a) Prepare the journal entries to record (1) the application of factory overhead to production during July and (2) the jobs completed during July.
(1)
Work in Process
72,000
Factory Overhead
72,000
(2)
Finished Goods
301,200
Work in Process
301,200
(b) What was the balance of the factory overhead account on July 31?
= $75,000 - $72,000
= $3,000 Debit
(c) Was factory overhead overapplied or underapplied on July 31?
Underapplied
(d) Determine the cost of the unfinished jobs on July 31.
Total debits to Work in Process:
Balance, July 1
$ 53,200
Direct materials
147,000
Direct labor
120,000
Factory overhead
72,000
$392,200
Less cost of goods finished during July
301,200
Balance, Work in Process, July 31
(cost of unfinished jobs)
$ 91,000
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(1)
Work in Process
72,000
Factory Overhead
72,000
(2)
Finished Goods
301,200
Work in Process
301,200