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Managerial Accounting: Basis of Direct Labor

Job 12 Job 13
Units in Each Order 100 200
Units Sold 100 ---
Materials Requisitioned $2480 $1970
Direct Labor Hours 820 1166
Direct Labor Cost $12300 $17490

Overhead is assigned on the basis of direct labor hours at a rate of $12. During Feb, Job 12 was completed & transferred to Finished Goods. Job 13 is the only unfinished job at the end of month.

Calculate the pre-unit cost of Job 12.
Calculate the ending balance in the Work in progress account.
Prepare the journal entries for requisitioning all materials used during the month.
Prepare the journal entries for direct labor for the month. Assume the workers have not been paid yet.
Prepare the journal entries reflecting the completion and sales on account of Job 12. The selling price is 160% of cost.

Solution Summary

Managerial accounting is examined. The overhead assigned basis of direct labor is determined.