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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Recording direct labor and factory overhead
Chamlee Industries Inc. manufactures recreational vehicles. Chamlee Industries uses a job order cost system. The time tickets from May jobs are summarized below.


Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $30 per direct labor hour. The direct labor rate is $25 per hour.
a.Determine the total factory labor costs transferred to Work in Process and Factor)' Overhead for May.
b.Determine the amount of factory overhead applied to production for May.
c. Illustrate the effects of the factory overhead applied in (b) on the accounts and financial statements.

To determine

Concept Introduction:

Work in Progress: All the direct material cost, labor cost and the applied manufacturing cost is transferred to the work in progress account from which we convert it into production and then transfer it to finished goods account.

Factory Overhead: All those indirect material cost, indirect labor cost is transferred to the factory overhead account and the applied factory overhead is transferred to the WIP account.

Requirement-1:

To Calculate:

Determine the labor transferred to the work in progress account and labor transferred the factory overhead account.

Explanation

Labor Cost transferred to the Work in progress= Job 5-100+ Job 5- 101+ Job 5- 102+ Job 5- 103

= 6400+ 3900+ ...

To determine

Concept Introduction:

Work in Progress: All the direct material cost, labor cost and the applied manufacturing cost is transferred to the work in progress account from which we convert it into production and then transfer it to finished goods account.

Factory Overhead: All those indirect material cost, indirect labor cost is transferred to the factory overhead account and the applied factory overhead is transferred to the WIP account.

Requirement-2:

To Calculate:

Determine the amount of factory overhead applied to production for may.

To determine

Concept Introduction:

Work in Progress: All the direct material cost, labor cost and the applied manufacturing cost is transferred to the work in progress account from which we convert it into production and then transfer it to finished goods account.

Factory Overhead: All those indirect material cost, indirect labor cost is transferred to the factory overhead account and the applied factory overhead is transferred to the WIP account.

Requirement-3:

To Indicate:

Effects of the factory overhead applied on the accounts and financial statement.

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