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8 March, 17:17

Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual inventory records. June 1 Purchased raw materials for $20,000 on account. 8 Raw materials requisitioned by production: Direct materials $8,000 Indirect materials 1,000 15 Paid factory utilities, $2,100 and repairs for factory equipment, $8,000. 25 Incurred $108,000 of factory labor. 25 Time tickets indicated the following: Direct Labor (7,000 hrs * $12 per hr) = $84,000 Indirect Labor (3,000 hrs * $8 per hr) = 24,000 $108,000 25 Applied manufacturing overhead to production based on a predetermined overhead rate of $7 per direct labor hour worked. 28 Goods costing $18,000 were completed in the factory and were transferred to finished goods. 30 Goods costing $15,000 were sold for $20,000 on account.

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  1. 8 March, 18:35
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    raw materials 20000 debit

    accounts payable 20000

    WIP 8000 debit

    factory overhead 1000 debit

    raw materials 9000 credit

    WIP 84000 debit

    factory overhead 24000 debit

    wages payables 108000 credit

    factory overhead 10100 debit

    cash 10100 credit

    WIP 49000 debit

    factory overhead 49000 credit

    Finished Goods 18000 debit

    WIP inventory 18000 credit

    COGS 15000 debit

    Finished Goods 15000 credit

    Explanation:

    The indirect materials and labor will be considered actual factory overhead thus debited into that account

    same procedures applies to the repair and utilities paid in cash we have to posted into factory overehad

    from the cost sheet we determiante 7,000 labor hours we apply the $7 overhead rate per our to get the amount of applied overhead

    The finished goods will increase while the WIP inventory decrease by the ammount transferred out

    The COGS is an expense which decreases our finished goods inventory as we sale them and are no longer in our possesion.
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