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hollynicole
Mar 27, 2011, 04:31 PM
For the year ended December 31, 2010, the job cost sheets of DeVoe Company contained the following data.
Job Number
Explanation
Direct Materials
Direct Labor
Total
Costs

7640 Balance 1/1 \$25,000 \$24,000 \$28,800 \$77,800
Current year's costs 30,000 36,000 43,200 109,200
7641 Balance 1/1 11,000 18,000 21,600 50,600
Current year's costs 43,000 48,000 57,600 148,600
7642 Current year's costs 48,000 55,000 66,000 169,000

Other data:

Raw materials inventory totaled \$15,000 on January 1. During the year, \$140,000 of raw materials were purchased on account.

Finished goods on January 1 consisted of Job No. 7638 for \$87,000 and Job No. 7639 for \$92,000.

Job No. 7640 and Job No. 7641 were completed during the year.

Job Nos. 7638, 7639, and 7641 were sold on account for \$530,000.

Manufacturing overhead incurred on account totaled \$120,000.

Other manufacturing overhead consisted of indirect materials \$14,000, indirect labor \$20,000, and depreciation on factory machinery \$8,000.

Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. Hint: Use a single T account for Work in Process Inventory. Calculate each of the following, then post each to the T account: (1) beginning balance, (2) direct materials, (3) direct labor, (4) manufacturing overhead, and (5) completed jobs.
Work in Process Inventory
1/1 Balance 128400 Completed Work 386200
Direct materials
Direct labor
12/31 Balance

Work in process balance \$

Unfinished job No. 7642 \$ 169000

Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold.
Account/Description Debit Credit
Cost of goods sold

Determine the gross profit to be reported for 2010. (List amounts from largest to smallest e.g. 10, 5, 3, 2.)
Sales \$ 530000
Cost of goods sold