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Chapter 15: Q5DQ (page 694)

Question: What journal entry is recorded when a materials manager receives a materials requisition and then issues materials (both direct and indirect) for use in the factory?

Short Answer

Expert verified

Answer

Date

Particulars

Debit ($)

Credit ($)

Work-in-process inventory (Direct material)

XXX

Factory overhead (Indirect material)

XXX

Raw material inventory

XXX

Step by step solution

01

Meaning of Journal Entry

A journal entry refers to a regular record of the business's monetary transactionsin a proper format.

02

A detailed explanation

Work-in-process inventory and factory overhead are debited from the credit account of raw material inventory when passing a journal entry when a manager receives a material requisition and releases the material for use in the factory.

One form of cost bookkeeping called "job order costing" collects and aggregates the costs for each work, work arranged, or project independently. Through this strategy, the factory keeps a distinct record of each particular amount of products that move through the office. When the manufactured merchandise varies essentially from one another, job order costing is applied.

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Most popular questions from this chapter

Refer to the information in QS 15-9. During the month, the jobs used direct labor as shown below. Jobs 1 and 3 are not finished by the end of March, and Job 2 is finished but not sold by the end of March.

(1) Determine the amounts of direct materials, direct labor, and factory overhead applied that would be reported on job cost sheets for each of the three jobs for March.

(2) Determine the total dollar amount of Work in Process Inventory at the end of March.

(3) Determine the total dollar amount of Finished Goods Inventory at the end of March. Assume the company has no beginning Work in Process or Finished Goods inventories.

Job 1

Job 2

Job 3

Direct labor used

\(9,000

\)4,000

$3,000

Clemens Cars’s job cost sheet for Job A40 shows that the cost to add security features to a car was \(10,500. The car was delivered to the customer, who paid \)14,900 in cash for the added features. What journal entries should Clemens record for the completion and delivery of Job A40?

Hansel Corporation has requested bids from several architects to design its new corporate headquarters. Frey Architects is one of the firms bidding on the job. Frey estimates that the job will require the following direct labor.

Architects Staff Clerical 150 300 500 \(300 75 20 1 2 3 4 A B C Labor Estimated Hours Hourly Rate

Frey applies overhead to jobs at 175% of direct labor cost. Frey would like to earn at least \)80,000 profit on the architectural job. Based on past experience and market research, it estimates that the competition will bid between \(285,000 and \)350,000 for the job.

1. What is Frey’s estimated cost of the architectural job?

2. What bid would you suggest that Frey submit?

At the beginning of the year, a company predicts total overhead costs of $560,000. The company applies overhead using machine hours and estimates it will use 1,400 machine hours during the year. What amount of overhead should be applied to Job 65A if that job uses 13 machine hours during January?

Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during 2017: direct materials costs, \(650,000; direct labor costs, \)3,000,000; and factory overhead costs applied, \(1,800,000.

1. Determine the company’s predetermined overhead rate for 2017.

2. Assuming that the company’s \)71,000 ending Work in Process Inventory account for 2017 had \(20,000 of direct labor costs, determine the inventory’s direct materials costs.

3. Assuming that the company’s \)490,000 ending Finished Goods Inventory account for 2017 had $250,000 of direct materials costs, determine the inventory’s direct labor costs and its overhead costs.
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