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Hyzel Farm Industries uses job order costing for customized farm machinery, applying factory overhead at a 150% rate on direct labor costs and marking up finished goods by 50%. As of June 1, the company had balances in finished goods, work in process, and raw materials, with specific amounts allocated to various jobs. The document outlines transactions for June, including material purchases, payroll accruals, job completions, and sales of finished goods, requiring the preparation of necessary accounting entries.

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99 views1 page

Problem

Hyzel Farm Industries uses job order costing for customized farm machinery, applying factory overhead at a 150% rate on direct labor costs and marking up finished goods by 50%. As of June 1, the company had balances in finished goods, work in process, and raw materials, with specific amounts allocated to various jobs. The document outlines transactions for June, including material purchases, payroll accruals, job completions, and sales of finished goods, requiring the preparation of necessary accounting entries.

Uploaded by

silverokimberly24
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Hyzel Farm Industries products customized farm machinery using a job order

costing. It applies factory overhead at a 150% rate based on direct labor


cost. The mark-up on finished goods has been set at 50% over
manufacturing costs. The records show the following balances on June 1:

Finished goods - 358,000


Work in process - 616,000
Raw Materials - 166,000

The amount in Finished Goods represents 202,000 for Job 101 and P156,000
for Job 102. Three jobs represent the work in process as follows:

Job 103
Direct materials - 52,000
Direct Labor - 120,000
Factory overhead - 150,000

Job 104
Direct materials - 14,000
Direct Labor - 80,000
Factory overhead - 100,000

Job 105
Direct materials - 10,000
Direct Labor - 40,000
Factory overhead - 50,000

The transactions for the month of June were as follows:


1. Materials amounting to 160,000 were purchased.
2. The total amount requisition for materials was 120,000. This was
distributed as follows: Job 104, 30,000; Job 105, 50,000; and 32,000 for Job
106, which was a new job started. The balance was considered for indirect
materials.
3. Accrued payroll for the month amounted to 417,500. This is distributed as
follows: 10% to Job 103; 20% to Job 104, 35% to Job 105; 30% to Job 106.
The remainder was considered indirect labor.
4. Payroll was fully paid.
5. Applied the factory overhead to production.
6. The following jobs were completed: Job 103 and Job 104.
7. Sold the following finished goods: Job 101, Job 102, and Job 104 at 50%
over manufacturing costs.

Required: Prepare the necessary entries to record the June transactions.

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