Reference no: EM13823386

Marco Boats Inc. uses a job order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations:

1. Purchased raw materials on account, $250,000.

2. An analysis of the requisitions shows the following: Direct materials requisitioned during the month:

              Job 101     $30,000

              Job 102      29,000

              Job 103      40,000

                          $99,000

3. Factory labor costs incurred were $83,000 of which $70,000 pertained to factory wages payable and $13,000 pertained to employer payroll taxes payable.

4. An analysis of the time tickets indicated the following: Direct labor incurred and charged to jobs during the month was:

              Job 101     $41,000

              Job 102      37,000

              Job 103      25,000

                         $103,000

5. Incurred manufacturing overhead costs as follows: indirect labor $10,000, indirect materials $8,000 and depreciation $11,000. Also, incurred $25,000 of manufacturing overhead costs on account.

6. Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 125% of direct labor costs.

7. Job 101 and Job 103 were completed during the month. (Note: show your work in part b. below.)

8. Job 101 was sold on account for $140,000.

Instructions:

a. Prepare journal entries to record the above transactions.

b. Compute the cost of Job 101, Job 102 and Job 103.

c. Compute the balance in the Work-in-Process account at the end of the month.

d. Compute the amount of over/under applied overhead.