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RayInc. is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year in determining their predetermined overhead rate, they estimated that they would work 31,000 machine hours and incur $248,000 in overhead costs.
Prepare journal entries in good form for only the following transactions that occurred during the year. If no entry is required write the word “None.” Omit journal entry explanations.
1. Raw materials amounting to $409,000 were used in production. $388,000 of the raw materials are classified as direct materials and $21,000 are classified as indirect materials.
2. Factory utility costs amounting to $12,000 were incurred and paid.
3. Direct labor costs were $145,000, indirect labor costs amounted to $61,000, and selling and administrative salaries were $190,000. All labor and salary costs were paid in cash.
4. The actual level of machine hours for the year was 29,000.
5. Sales for the year amounted to $500,000 all on account, and the cost of goods sold were $300,000. A periodic inventory system was used.
Sebastian Inc. produces a product which goes through three processes – Process 1, Process 2, and Process 3. Process 1 is the Mixing Department; Process 2 is the Blending Department; and Process 3 is Pouring Department. The following information pertains to the Mixing Department to the units and costs for the month of October (% is the percentage completed):
Direct Materials Conversion
Beginning Inventory 1000 units, 50% 1000 units, 25%
$10,000 $20,000
Started this Period 20,000 units 20,000 units
$400,000 $1,600,000
Ending Inventory 2000 units, 75% 2000 units, 50%
1. Prepare a complete production report for the month of October using the FIFO technique.

2. Prepare the journal entry transferring the goods to the Blending Department from the Mixing Department.

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