Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs based on machine-hours. At the beginning of the year, the company used a cost formula to estimate $4,305,000 in manufacturing overhead cost at an activity level of 574,000 machine-hours. The company spent the month of January working on a large order for 12,100 custom-made machined parts. The company had no work in process at the beginning of JanuaryThe completed job for 12,100 custom-made machined parts was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember the cost of a completed job consists of direct materials, direct labor, and applied overhead.)Record the entry to transfer from WIP to Finished goods.

To record the entry to transfer the completed job from Work in Process (WIP) to Finished Goods, we need to first calculate the total cost of the job. This includes direct materials, direct labor, and applied overhead.

Given dataTo record the entry to transfer the completed job from Work in Process (WIP) to Finished Goods, we need to first calculate the total cost of the job. This includes direct materials, direct labor, and applied overhead.

Given 

- **Estimated manufacturing overhead cost:** $4,305,000
- **Estimated machine-hours:** 574,000 machine-hours
- **Actual job machine-hours (for 12,100 parts):** Not explicitly given, but we'll assume the applied overhead rate is based on estimated machine-hours.

### Step 1: Calculate the predetermined overhead rate

The predetermined overhead rate is calculated using the formula:

\[
\text{Predetermined Overhead Rate} = \frac{\text{Estimated Manufacturing Overhead}}{\text{Estimated Machine-Hours}}
\]

\[
\text{Predetermined Overhead Rate} = \frac{4,305,000}{574,000} = \$7.50 \text{ per machine-hour}
\]

### Step 2: Apply the overhead to the job

Now, multiply the actual machine-hours used by the predetermined overhead rate. However, since the problem does not provide the actual machine-hours for the job, we cannot calculate the exact applied overhead without this information. Let's assume $ X $ represents the machine-hours used.

Applied Overhead = $ X \times \$7.50 $

### Step 3: Record the journal entry

Once the total job cost is determined (including direct materials, direct labor, and applied overhead), the journal entry to transfer the job from Work in Process (WIP) to Finished Goods is:

**Journal Entry:**

\[
\begin{array}{rl}
\text{Finished Goods Inventory} & \quad \text{Dr} \quad \text{\$Total Job Cost} \\
\text{Work in Process Inventory} & \quad \text{Cr} \quad \text{\$Total Job Cost} \\
\end{array}
\]

- **Debit:** Finished Goods Inventory for the total cost of the job.
- **Credit:** Work in Process Inventory for the same amount.

### Example Calculation (if machine-hours were provided):
If the job used 10,000 machine-hours:

Applied Overhead = $ 10,000 \times 7.50 = \$75,000 $

Assuming Direct Materials = \$100,000 and Direct Labor = \$150,000, then:

Total Job Cost = Direct Materials + Direct Labor + Applied Overhead  
Total Job Cost = \$100,000 + \$150,000 + \$75,000 = \$325,000

**Journal Entry:**

\[
\begin{array}{rl}
\text{Finished Goods Inventory} & \quad \text{Dr} \quad 325,000 \\
\text{Work in Process Inventory} & \quad \text{Cr} \quad 325,000 \\
\end{array}
\]

If you can provide the actual machine-hours or more details, the exact numbers can be calculated.

Would you like more details on how the predetermined overhead rate affects job costing, or do you have other questions?

### Follow-up Questions:
1. How is the predetermined overhead rate determined in different industries?
2. What happens if the actual overhead costs differ significantly from the estimated overhead costs?
3. How do you adjust for underapplied or overapplied overhead at the end of the period?
4. What other costing systems might be used instead of job-order costing?
5. How does job-order costing differ from process costing?

**Tip:** Always ensure that your estimated overhead costs and machine-hours are as accurate as possible to avoid significant discrepancies in cost allocation.

Learn how to record the entry from Work in Process (WIP) to Finished Goods in job-order costing, including the calculation of applied overhead and total job cost. This problem involves estimating manufacturing overhead, applying the predetermined overhead rate, and journalizing the transfer.

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