The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year. Raw materials purchased on account, $210,000. Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials). Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000. Depreciation recorded on factory equipment, $40,000. Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable). The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October. Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost. Required: Prepare journal entries to record the information given above. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $42,000.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter2: Job Order Costing

Section: Chapter Questions

Problem 1PA: Barnes Company uses a job order cost system. The following data summarize the operations related to...

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The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year.

Raw materials purchased on account, $210,000.
Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials).
Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.
Depreciation recorded on factory equipment, $40,000.
Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable).
The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October.
Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost.

Required:

Prepare journal entries to record the information given above.
Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $42,000.

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