Illustration Example IIThe following information reflects Walczak Companys job

order production activities for May.Raw Materials Purchases$16,000

Factory payroll cost15,400
Overhead costs incurred
Indirect materials5,000
Indirect labor3,500
Other factory overhead9,500
Walczaks predetermined overhead rate is 150% of direct labor cost. Costs are
allocated to the three jobs worked on during May as follows.
Job 401Job 402Job 403
In-process balances on April 30
Direct materials $3,600
Direct labor 1,700
Applied overhead 2,550
Costs during May
Direct materials 3,550$3,500$1,400
Direct labor 5,1006,000800
Applied overhead???
Status on May 31Finished (sold)Finished (unsold)In process
RequiredDetermine the total cost of:The April 30 inventory of jobs in
process.Materials used during May.Labor used during May.Factory overhead
incurred and applied during May and the amount of any over- or under applied
overhead on May 31.Each job as of May 31, the May 31 inventories of both goods
in process and finished goods, and the goods sold during May.Prepare
summarized journal entries for the month to record:Materials purchases (on
credit), the factory payroll (paid with cash), indirect materials, indirect labor, and
the other factory overhead (paid with cash).Assignment of direct materials, direct
labor, and overhead costs to the Goods in Process Inventory account. (Use
separate debit entries for each job.)Transfer of each completed job to the Finished
Goods Inventory account.Cost of goods sold.Removal of any under applied or over
applied overhead from the Factory Overhead account. (Assume the amount is not
material.)Prepare a manufacturing statement for May.
Raw material purchases 16000
Factory payroll cost 15400
Overhead costs incurred
Indirect materials 5000
Indirect labor 3500

Other factory overhead 9500

Predetermined overhead rate 150%

of direct labor cost
Job 401 Job 402 Job 403
In process balance on Apr 30
Direct material 3600
Direct labor 1700
Applied overhead 2550
Cost during May
Direct material 3550 3500 1400
Direct labor 5100 6000 800
Applied overhead ? ? ?
Status Finished-soFinished-u in process
Total cost of April 30 inventory of jobs in process-Job 401
Direct material $ 3,600
Direct labor $ 1,700
Applied overhead $ 2,550

Total Costs $ 7,850

materials used during May

Direct material
Job 401 $ 3,550
Job 402 $ 3,500
Job 403 $ 1,400
Total direct materials $ 8,450
Indirect materials $ 5,000
Total materials used $ 13,450

Labor used during May

Direct labor
Job 401 $ 5,100
Job 402 $ 6,000
Job 403 $ 800
Total direct labor $ 11,900
Indirect labor $ 3,500
Total labor used $ 15,400

Factory overhead incurred in May

Actual overhead
Indirect materials $ 5,000
Indirect labor $ 3,500
Other factory overhead $ 9,500
Total actual overhead $ 18,000
less: Overhead applied $ 17,850
Underapplied overhead $ 150

Total cost of each job

Job 401 Job 402 Job 403
In process balance on Apr 30
Direct material $ 3,600
Direct labor $ 1,700
Applied overhead $ 2,550
Cost during May
Direct material $ 3,550 $ 3,500 $ 1,400
Direct labor $ 5,100 $ 6,000 $ 800
Applied overhead $ 7,650 $ 9,000 $ 1,200
Total Costs $ 24,150 $ 18,500 $ 3,400

Manufacturing Statement
Direct material $ 8,450
Direct labor $ 11,900
Factory overhead
Indirect materials $ 5,000
Indirect labor $ 3,500
Other factory overhead $ 9,500
Total production costs $ 38,350
add: goods in process on April 30 $ 7,850
less: goods in process on May 31 $ 3,400
less: underapplied overheads $ 150
Cost of goods manufactured $ 42,650
Journal Entries
Raw Materials Inventory $ 16,000
Accounts Payable
Materials purchases on credit.

Factory payroll $ 15,400

Cash
the factory payroll being paid with cash.

Factory overhead $ 5,000

Raw Materials Inventory

Factory overhead $ 3,500

Factory payroll

Factory overhead $ 9,500

Cash
Other factory overhead paid in cash

Goods in process inventory-Job 401 $ 3,550

Goods in process inventory-Job 402 $ 3,500
Goods in process inventory-Job 403 $ 1,400
Raw Materials Inventory
Assignment of direct materials to goods in process inventory account.
Goods in process inventory-Job 401 $ 5,100
Goods in process inventory-Job 402 $ 6,000
Goods in process inventory-Job 403 $ 800
Factory payroll
Assignment of direct labor to goods in process inventory account.

Goods in process inventory-Job 401 $ 7,650

Goods in process inventory-Job 402 $ 9,000
Goods in process inventory-Job 403 $ 1,200
Factory overhead
Assignment of overhead cost to goods in process inventory account.

Finished Goods Inventory $ 42,650

Goods in process inventory-Job 401
Goods in process inventory-Job 402
Transfer of completed job to the Finished Goods Inventory account.
Cost of Goods sold $ 24,150
Finished Goods Inventory
Sale of job 401

Cost of Goods sold $ 150

Factory overhead
assignment of under applied overhead from the Factory Overhead account.
$ 16,000

$ 15,400

$ 5,000

$ 3,500

$ 9,500

$ 8,450

$ 11,900

$ 17,850

$ 24,150
$ 18,500
$ 24,150

$ 150