Exercise 15 3a Job Order Cost Sheet For Ryan Company Is Show

Exercise 15 3a Job Order Cost Sheet For Ryan Company Is Shown Belowjo

Exercise 15-3 A job order cost sheet for Ryan Company is shown below. Job No. 92 for 2,000 units includes details on direct materials, direct labor, manufacturing overhead, and total costs. The exercise asks to determine the balance in Work in Process Inventory on January 1, given that this was the only unfinished job, and to calculate the overhead rate used in each year if manufacturing overhead is applied based on direct labor cost. Additionally, it requires preparing journal entries at January 31 to record the relevant transactions related to Job No. 92.

Paper For Above instruction

The problem presented involves analyzing a job order cost sheet for Ryan Company, specifically focusing on Job No. 92, which accounts for 2,000 units produced. This exercise encompasses several important aspects of managerial accounting, including determining beginning inventory balances, calculating overhead rates, and recording journal entries for manufacturing activities, which are fundamental for understanding production cost management and financial recordkeeping in manufacturing environments.

To address the question of the Work in Process (WIP) Inventory balance on January 1 as if this was the only unfinished job, we need to understand the flow of production costs and the completion status of jobs. The data provided shows the total costs associated with Job No. 92, suggesting that if this was the sole unfinished job, then the balance in WIP Inventory on January 1 would correspond precisely to the work-in-progress portion of Job No. 92 at that time. Given that the total cost of the job is $49,324, and assuming the costs provided for direct materials, direct labor, and manufacturing overhead are for the job after completion, the initial balance in WIP would thus be the costs attributable to work that had not yet been completed by the start of the period.

Next, calculating the manufacturing overhead rate based on direct labor cost involves dividing the overhead by the direct labor costs for each year. The problem indicates that overhead is applied based on direct labor costs; thus, the ratios are essential for estimating production expenses accurately. Historical and current year rates can be derived by dividing the manufacturing overhead incurred by the direct labor costs incurred during those periods and then multiplying by 100 to get a percentage. These rates are crucial for cost control, budgeting, and pricing decisions.

Finally, preparing journal entries at January 31 involves recording the purchase and use of raw materials, the incurrence of factory labor costs, application of manufacturing overhead, and completion of the job. Accurate journal entries ensure correct financial reporting, cost tracing to jobs, and inventory valuation. Entries likely include debits to Raw Materials Inventory, Factory Labor, and Manufacturing Overhead (applied), with corresponding credits to Accounts Payable or Cash, along with adjustments to WIP Inventory and Finished Goods accounts as jobs are completed.

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