SOUTH DAKOTA CORPORATION23 SOUTH DAKOTA CORPORATION uses a j

SOUTH DAKOTA CORPORATION(2-3)

SOUTH DAKOTA CORPORATION uses a job-order costing system with normal costing. At the start of the period, the company had the following balances:

Raw Materials inventory

$ 2,500

Work in process inventory

            -

Finished goods inventory

27,400

At the start of the period, only Job Alpha was in finished goods.

During the month of February, the following transactions occurred:

Purchased raw materials on account for $24,500.

Requisitioned $23,000 of materials for use in production. Of the total, $9,000 was for Job Beta, $8,500 for Job Gamma and the remainder for Job Sigma.

Direct labor incurred for the month was $36,000. The average wage rate is $20 per hour. Direct labor was used for jobs as follows:

Job Beta – 800 hours

Job Gamma – 600 hours

Job Sigma – 400 hours

Actual overhead incurred for the period was $17,900 (credit various payables).

The company applied overhead to production at the rate of $10.00 per direct labor hour.

Job Beta and Job Gamma were completed during the period and transferred to finished goods.

Sold Job Alpha and Job Beta to their respective customers on account at cost plus 40%.

REQUIRED:

Prepare all journal entries for items a) through g)

Purchase                               $24,500

Account payable                              $24,500

Post all job costs to simplified job-cost sheets.

Post summary job-cost information and other transactions to T-accounts as appropriate.

Compute the ending raw materials, work in process and finished goods inventories.

Compute any misapplied overhead and journalize

Compute sales, cost of sales and gross profit as shown on the Income Statement.

Solution

Information as shown in the Income Statement

1. Cost of goods sold =$60,300

2. Sales =$84,560

3. Gross Profit = $24,260

Working: