A summary of the time tickets for August follows:

Description Amount
Job 321 $11,000
Job 329 9,200
Job 336 3,000
Job 342 8,300
Job 346 5,700
Indirect labor 3,000

Present the journal entries to record (a) the labor cost incurred and (b) the application of factory overhead to production for August. The factory overhead rate is 70% of direct labor cost.

Answer and Explanation:

To calculate ending work in progress we use the formula:

Ending WIP = Beginning WIP + Manufacturing costs - Cost of goods manufactured

Debit ($)Credit ($)

Work-in progress$39,200(Dr)

Wages payable:

Job No. 321 $11,000(Cr)

Job No. 329 $9,200(Cr)

Job No. 336 $5,000(Cr)

Job No. 342 $8,300(Cr)

Job No. 346 $5,700(Cr)

Work-in progress$8,000(Dr)

Manufacturing overhead

$8,000(Cr)

Work-in progress$27,440(Dr)

Factory overhead ($39,200 * 70/ 100)

$27,400(Cr)

Work in progress refers to goods that are yet to be finished but have passed raw material stage as they have been partly processed. The formula stated above is used to calculate ending work in progress however we just made journal entries to reflect costs and work in progress.