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Exercise 1 – Stine Company uses

Exercise 1 – Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $4,130 and two jobs in process: Job No. 429 $2, 370, and Job No. 430 $1,760. During May, a summary of source documents reveals the following.

Job Number

Requisition Slips

Labor Time
















General use









Stine Company applies manufacturing overhead to jobs at an overhead rate of 69% of direct labor cost. Job No. 429 is completed during the month.

Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429.

Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets.

Exercise 2 – Crawford Corporation incurred the following transactions.

1. Purchased raw materials on account $49,700.

2. Raw Materials of $41,700 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $8,100 was classified as indirect materials.

3. Factory labor costs incurred were $61,900, of which $50,500 pertained to factory wages payable and $11,400 pertained to employer payroll taxes payable.

4. Time tickets indicated that $55,400 was direct labor and $6,500 was indirect labor.

5. Manufacturing overhead costs incurred on account were $83,700.

6. Depreciation on the company’s office building was $8,900.

7. Manufacturing overhead was applied at the rate of 160% of direct labor cost.

8. Goods costing $93,500 were completed and transferred to finished goods.

9. Finished goods costing $85,100 to manufacture were sold on account for $104,500.

Journalize the transactions.

Exercise 3 – Tombert Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client’s consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.

Estimated overhead


Actual overhead


Estimated decorator hours


Actual decorator hours


The company uses Operating Overhead in place of Manufacturing Overhead.

Compute the predetermined overhead rate.

Prepare the entry to apply the overhead for the year.

Determine whether the overhead was under- or overapplied and by how much.

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