Reynolds Corp is a manufacturing company of kayaks. On June 1, 2011 the company’s ledger contains the following data:
Raw Material Inventory $18,000
Work in Process Inventory $7,320
Manufacturing Overhead Incurred $1,500
Job Cost Sheet
Customer Dir Material Dir Lab Mfg Ovh
Dicks $1,500 $1,200 $840
Sports Authority $1,200 $720 $504
Bass Pro shop $540 $480 $336
$3,240 $2,400 $1,680
During the month of June the following costs were incurred: (a) raw materials purchased on account $2,400,
(b) labor paid $4,560, (c) manufacturing overhead paid $840.
A summary of materials requisition slips and time tickets for the month of June are:
Customer Mat Req Time Ticket
Dicks $300 $240
Sports Authority $360 $600
Bass Pro Shop $1,380 $780
Sears $1,140 $1,740
General Use $900 $1,200
Overhead was charged to jobs on the basis of $0.40 per dollar of direct labor cost. The kayaks for Dicks, Sports Authority and Bass Pro Shop were completed during June. The jobs for Dicks and Bass Pro Shop were sold on account for $11,100 and 8,300 respectively.
1. Prepare journal entries for the June transactions: (a) for purchase of raw materials, factory labor costs incurred, and manufacturing overhead cost incurred, (b) assignment of raw material, labor and overhead to production, (c) completion of jobs and sale of goods.
2. Post the entries to Work in process Inventory.
3. Prepare the job cost sheets for all jobs worked during the month.
4. Prepare the journal entries for the sales to Dicks and Bass Pro Shop.
5. What is the balance of the Finished Goods Inventory? What is the total balance of the Work in Process inventory?
6. What is the amount of over or under applied overhead?