Degelman Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2014, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $22,600, direct labor $13,560, and manufacturing overhead $18,080. As of January 1, Job No. 49 had been completed at a cost of $101,700 and was part of finished goods inventory. There was a $16,950 balance in the Raw Materials Inventory account. During the month of January, Deglman Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $137,860 and $178,540, respectively. The following additional events occurred during the month.
1. Purchased additional raw materials of $101,700 on account.
2. Incurred factory labor costs of $79,100. Of this amount $18,080 related to employer payroll taxes.
3. Incurred manufacturing overhead costs as follows: indirect materials $19,210; indirect labor $22,600; depreciation expense on equipment $21,470; and various other manufacturing overhead costs on account $18,080.
4. Assigned direct materials and direct labor to jobs as follows.
Job No. Direct Materials Direct Labor
50 $11,300 $5,650
51 44,070 28,250
52 33,900 22,600
1. Calculate the pre-determined overhead rate for 2014, assuming Degelman Company estimates total manufacturing overhead costs of $1,107,400, direct labor costs of $791,000, and direct labor hours of 22,600 for the year.
Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50.
Job No. 50
Date Direct Materials Direct Labor Manufacturing Overhead
Beg.
Jan.
Cost of completed job
Direct materials
Direct labor
Manufacturing overhead
Total cost
Job No. 51
Date Direct Materials Direct Labor Manufacturing Overhead
Jan.
Cost of completed job
Direct materials
Direct labor
Manufacturing overhead
Total cost
Job No. 52
Date Direct Materials Direct Labor Manufacturing Overhead
Jan.
2. Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.