Question

Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company’s production activities during May 2017 follows. Purchased raw materials on credit, $220,000. Materials requisitions record use of the following materials for the month. Job 136 $ 50,000 Job 137 33,000 Job 138 19,400 Job 139 23,200 Job 140 7,200 Total direct materials 132,800 Indirect materials 20,500 Total materials used $ 153,300 Paid $15,500 cash to a computer consultant to reprogram factory equipment. Time tickets record use of the following labor for the month. These wages were paid in cash. Job 136 $ 12,100 Job 137 10,500 Job 138 37,500 Job 139 39,200 Job 140 3,200 Total direct labor 102,500 Indirect labor 25,500 Total $ 128,000 Applied overhead to Jobs 136, 138, and 139. Transferred Jobs 136, 138, and 139 to Finished Goods. Sold Jobs 136 and 138 on credit at a total price of $525,000. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). Depreciation of factory building $ 68,000 Depreciation of factory equipment 36,500 Expired factory insurance 12,000 Accrued property taxes payable 35,000 Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost. Required: 1. Prepare a job cost sheet for each job worked on during the month.

Answer 1

Answer / Explanation:

To properly answer this question, we first start by defining what a job cost sheet is.

A job cost sheet is used in job-order costing to accumulate manufacturing costs of a specific job.

We should also note that manufacturing costs include direct material cost, direct labor cost and manufacturing overhead.

Actual direct material and actual direct labor costs are recorded since they can be directly traced to a job but a budgeted overhead cost will typically be applied since actual overhead costs are not known till the end of a period.

With the understanding of what a Job Cost Sheet is, we therefore go ahead to preparing the heading of the cost job sheet. However, kindly note that an attachment have been added below showing proper profiling of jobs worked on during the month.

Direct         Direct   Manufacturing  Total Manufacturing        Cost of unit

Material      Labor      Overhead             Cost                    transferred to goods