Standard costs with its job order cost accounting system

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Reference no: EM13790615

A Jorgensen Corporation uses standard costs with its job order cost accounting system. In January, an order (Job No. 12) for 1,900 units of Product B was received. The standard cost of one unit of Product B is as follows.

Direct Materials 3 pounds at $1.00 per pound $3.00

Direct Labour 1 hour at $8.00 per hour 8.00

Overhead 2 hours (variable $4.00 per machine hour; 12.50 fixed $2.25 per machine hour)

Standard cost per unit $23.50

Normal capacity for the month was 4,200 machine hours. During January, the following transactions applicable to Job No. 12 occurred.

1. Purchased 6,200 pounds of raw materials on account at $1.05 per pound.

2. Requisitioned 6,200 pounds of raw materials for Job No. 12.

3. Incurred 2,000 hours of direct labor at a rate of $7.80 per hour.

4. Worked 2,000 hours of direct labor on Job No. 12.

5. Incurred manufacturing overhead on account $25,000.

6. Applied overhead to Job No. 12 on basis of standard machine hours allowed. 7. Completed Job No. 12.

8. Billed customer for Job No. 12 at a selling price of $65,000.

Instructions

(a) Journalize the transactions.

(b) Post to the job order cost accounts.

(d) Prepare the January 2014 income statement for management. Assume selling and administrative expenses were $2,000.

Reference no: EM13790615

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