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3 years ago

Job Cost Journal Entries and T Accounts

Business

1 answer:

koban [17]3 years ago

6 0

Answer:

Cost of goods sold = $1,224,000

Cost of goods manufactured = $1,200,000

Direct labor incurred = $360,000

Direct material used = $430,000

Indirect material used = $96,000

Total materials purchased = $556,000

Explanation:

Materials Inv. WIP Inv. Finished Goods Inv.

Beginning inventory $40,000 $50,000 $80,000

Ending inventory $70,000 $60,000 $56,000

Total sales were $2,000,000, on which the company earned a 40% gross profit.

Redwood uses a predetermined manufacturing overhead rate of 110% of direct labor costs. Manufacturing overhead applied was $396,000. Exclusive of indirect material used, total manufacturing overhead incurred was $300,000; it was under-applied by $24,000.

COGS = $2,000,000 x 60% = $1,200,000 + $24,000 of underapplied overhead = $1,224,000

COGM = COGS + ending finished goods inventory - beginning finished goods inventory = $1,224,000 + $56,000 - $80,000 = $1,200,000

Direct labor = applied overhead / predetermined overhead rate = $396,000 / 1.1 = $360,000

Direct materials = COGM - beginning WIP - overhead applied - underapplied overhead - direct labor + ending WIP = $1,200,000 - $50,000 - $396,000 - $24,000 - $360,000 + $60,000 = $430,000

Indirect materials = overhead - $300,000 = $396,000 - $300,000 = $96,000

Total materials purchased = ending materials + direct materials used + indirect materials - beginning materials = $70,000 + $430,000 + $96,000 - $40,000 = $556,000

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