Langdon Company Manufactures Custom Designed Toy Sailboats

Langdon Company manufactures custom designed toy sailboats. They use a job order costing system. Overhead is applied based on direct labor hours. Estimated overhead for 2012 is $11,840 and the company estimates it will use 7,400 direct labor hours. The following events occurred in March.
(a.) The company purchased materials for $800 on account.
(b.) The production supervisor requisitioned 15 sheets of fiberglass for constructing the boats. The fiberglass was in stock and originally cost $3 a sheet.
(c.) Direct labor on the boats cost $500.
(d.) More materials were purchased for $350 on account.
(e.) Indirect labor costs were $210.
(f.) A utility bill for the boat factory was $230 and was paid in cash.
(g.) A repair bill for the salesman's car was $75 and will be paid next month.
(h.) Additional materials were placed into production which cost $215.
(i.) Manufacturing overhead was applied (direct labor during March totaled 500 hours).
(j.) One sailboat was completed which cost $325.
(k.) The completed sailboat was sold for $750. Record the sale and the cost of sale.
Required:
(1.) Determine the overhead application rate.
(2.) Prepare journal entries for the above transactions.
(3.) What is the cost of the remaining Work in Process?

Correct Answer:

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(1.) $1.60
(2.) Jour...

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