Weekly Time Tickets Indicate The Following Distribution

the Weeklytime Ticketsindicate The Following Distribution Of Labor H

1. The weekly time tickets indicate the following distribution of labor hours for three direct labor employees: Hours Process Job 301 Job 302 Job 303 Improvement Tom Couro David Clancy Jose Cano The direct labor rate earned per hour by the three employees is as follows: Tom Couro $32 David Clancy 36 Jose Cano 28 The process improvement category includes training, quality improvement, and other indirect tasks. Answers A. Journalize the entry on July 15 to record the factory labor costs for the week. (3 Journal Entries) B. Assume that Jobs 301 and 302 were completed but not sold during the week and that Job 303 remained incomplete at the end of the week. How would the direct labor costs for all three jobs be reflected on the financial statements at the end of the week? Cost of Goods Sold Work In Process Finished Goods Factory Overhead Job 301 Job 302 Job 303

Paper For Above instruction

This analysis addresses the journalization of factory labor costs and the subsequent reflection of job costs within financial statements, focusing on the proper recording of labor expenses for a manufacturing firm. The processes involved include recording labor costs, assigning costs to jobs or work-in-progress, and understanding the implications for financial statement presentation, particularly the valuation of inventory and cost of goods sold (COGS).

Accounting for Labor Costs in Manufacturing

Proper accounting treatment begins with recording payroll and associated labor costs incurred during a given period. In the context of a job order costing system, direct labor costs are traced directly to specific jobs, while indirect labor costs are applied to overhead accounts for allocation across all jobs.

Recording Labor Costs: Journal Entries

On July 15, the factory recorded labor costs through three main journal entries. First, debiting Work in Process for direct labor costs assigned to jobs, debiting Manufacturing Overhead for indirect labor, and crediting Wages Payable or Cash for total wages paid.

The entries are as follows:

1. To record direct labor costs:
   • Debit Work in Process—Job 301 and Job 302 for their respective direct labor hours multiplied by the hourly rates ($32 for Tom Curo, $36 for David Clancy, $28 for Jose Cano).
   • Debit Manufacturing Overhead for indirect labor used (sum of indirect labor hours at their wage rates, or as specified).
   • Credit Wages Payable or Cash for total wages.

Assuming the weekly hours per employee and their distribution across jobs, the total direct labor costs and indirect labor can be calculated, thereby facilitating precise journal entries.

Impact on Financial Statements at Week’s End

At the end of the week, the classification of labor costs reflects the status of jobs:

• Jobs 301 and 302, which are completed but not yet sold, are transferred from Work in Process to Finished Goods Inventory, capturing their total accumulated costs.
• Job 303, remaining incomplete, continues to reside in Work in Process Inventory, with associated direct labor costs added.
• The costs associated with jobs are appropriately classified on the financial statements as follows:
• Work in Process: Contains direct labor costs on incomplete jobs, including Job 303.
• Finished Goods: Stores costs of completed jobs not yet sold, like Jobs 301 and 302.
• Cost of Goods Sold: Will include the costs of jobs when they are sold.

This structure aids in accurate cost and profit analysis, reflecting the true inventory valuation and ensuring compliance with accounting standards.

Conclusion

Correct journalization and classification of labor costs are vital for accurate financial reporting in manufacturing environments. By systematically recording labor expenses, assigning costs to jobs, and properly transferring completed jobs to finished goods, companies can ensure their financial statements accurately reflect production activities and inventory values, ultimately supporting managerial decisions and financial transparency.

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