2. Alex Corporation uses a job-order costing system and a predetermined overhead rate based on machine hours.
At the beginning of the year, the company estimated manufacturing overhead for the year would be $500,000 and
machine hours used would be 25,000.
The following information pertains to December of the current year:
Job 1 Job 2 Job 3 Totals
Beginning balance $50,000 $60,000 $40,000 $150,000
Current period costs added:
Materials requisitioned $80,000 $70,000 $50,000 $200,000
Direct labor costs $30,000 $40,000 $20,000 $90,000
Current period activity
Machine hours 2,600 3,100 2,300 8,000
Assume that Job 2 is the only job completed during the month.
Required:
a. Compute the predetermined overhead application rate.
b. Determine the total cost associated with each job.
Job 1
Job 2
Job 3
c. Give the journal entry to record the total amount of direct labor incurred on job 2.
d. Give the journal entry to record the total amount of direct material costs requisitioned (used) on job 2.
e. Give the journal entry to record the completion of Job 2.
f. What is the ending balance of work-in-process inventory?
