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Dillon Products manufactures various machined parts to customerspecifications. The company uses a job-order costing system andapplies overhead costs to jobs on the basis of machine-hours. Atthe beginning of the year, the company used a cost formula toestimate that it would incur $4,327,500 in manufacturing overheadcost at an activity level of 577,000 machine-hours.

The company spent the entiremonth of January working on a large order for 9,000 custom mademachined parts. The company had no work in process at the beginningof January. Cost data relating to January follow:

a. Raw materials purchased onaccount, $317,000.
b. Raw materials requisitioned forproduction, $262,000 (80% direct and 20% indirect).
c. Labor cost incurred in thefactory, $153,000, of which $51,000 was direct labor and $102,000was indirect labor.
d. Depreciation recorded on factoryequipment, $63,600.
e. Other manufacturing overheadcosts incurred, $85,500 (credit Accounts Payable).
f.

Manufacturing overhead cost was applied to production on thebasis of 40,640 machine-hours actually worked during the month.
g.

The completed job was moved into the finished goods warehouse onJanuary 31 to await delivery to the customer. (In computing thedollar amount for this entry, remember that the cost of a completedjob consists of direct materials, direct labor, andapplied overhead.)

Required:
1.

Prepare journal entries to record items (a) through (f) above.[Ignore item (g) for the moment.] (If no entry is requiredfor a transaction/event, select "No journal entry required" in thefirst account field. Do not round intermediatecalculations.)

2.

Prepare T-accounts for Manufacturing Overhead and Work inProcess. Post the relevant items from your journal entries to theseT-accounts. (Do not round intermediatecalculations.)

3. Prepare a journal entry for item(g) above. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field. Do not round intermediatecalculations.)

4.

Compute the unit product cost that will appear on the job costsheet. (Do not round intermediate calculations. Round youranswer to 2 decimal places.)

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Sixta Kovacek
Sixta KovacekLv2
28 Sep 2019

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The following cost data relate to the manufacturing activitiesof Chang Company during the just completed year: Manufacturingoverhead costs incurred: Indirect materials $ 16,100 Indirect labor141,000 Property taxes, factory 9,100 Utilities, factory 81,000Depreciation, factory 149,700 Insurance, factory 11,100 Totalactual manufacturing overhead costs incurred $ 408,000 Other costsincurred: Purchases of raw materials (both direct and indirect) $411,000 Direct labor cost $ 71,000 Inventories: Raw materials,beginning $ 21,100 Raw materials, ending $ 31,100 Work in process,beginning $ 41,100 Work in process, ending $ 71,100 The companyuses a predetermined overhead rate of $20 per machine-hour to applyoverhead cost to jobs. A total of 20,800 machine-hours were usedduring the year. Required: 1. Compute the amount of underapplied oroverapplied overhead cost for the year. 2. Prepare a schedule ofcost of goods manufactured for the year.

Dillon Products manufactures various machined parts to customerspecifications. The company uses a job-order costing system andapplies overhead cost to jobs on the basis of machine-hours. At thebeginning of the year, the company used a cost formula to estimatethat it would incur $4,305,000 in manufacturing overhead cost at anactivity level of 574,000 machine-hours.

The company spent the entire month of January working on a largeorder for 12,500 custom-made machined parts. The company had nowork in process at the beginning of January. Cost data relating toJanuary follow:

Raw materials purchased on account, $313,000.

Raw materials used in production, $264,000 (80% direct materialsand 20% indirect materials).

Labor cost accrued in the factory, $171,000 (one-third directlabor and two-thirds indirect labor).

Depreciation recorded on factory equipment, $63,600.

Other manufacturing overhead costs incurred on account,$86,000.

Manufacturing overhead cost was applied to production on thebasis of 40,630 machine-hours actually worked during the month.

The completed job for 12,500 custom-made machined parts wasmoved into the finished goods warehouse on January 31 to awaitdelivery to the customer. (In computing the dollar amount for thisentry, remember that the cost of a completed job consists of directmaterials, direct labor, and applied overhead.)

Required:

1. Prepare journal entries to record items (a) through (f) above[ignore item (g) for the moment].

2. Prepare T-accounts for Manufacturing Overhead and Work inProcess. Post the relevant items from your journal entries to theseT-accounts.

3. Prepare a journal entry for item (g) above.

4. If 10,500 of the custom-made machined parts are shipped tothe customer in February, how much of this job’s cost will beincluded in cost of goods sold for February?

EXERCISE 3–16

Dillon Products manufactures various machined parts to customerspecifications. The company uses a job-order costing system andapplies overhead cost to jobs on the basis of machine-hours. At thebeginning of the year, it was estimated that the company would work240,000 machine-hours and incur $4,800,000 in manufacturingoverhead costs.

The company spent the entire month of January working on a largeorder for 16,000 custom made machined parts. The company had nowork in process at the beginning of January. Cost data relating toJanuary follow:

1.

Raw materials purchased on account, $325,000.
2.

Raw materials requisitioned for production, $290,000 (80% directmaterials and 20% indirect materials).
3.

Labor cost incurred in the factory, $180,000 (one-third directlabor and two-thirds indirect labor).
4.

Depreciation recorded on factory equipment, $75,000.
5.

Other manufacturing overhead costs incurred, $62,000 (creditAccounts Payable).
6.

Manufacturing overhead cost was applied to production on the basisof 15,000 machine-hours actually worked during the month.
7.

The completed job was moved into the finished goods warehouse onJanuary 31 to await delivery to the customer. (In computing thedollar amount for this entry, remember that the cost of a completedjob consists of direct materials, direct labor, and appliedoverhead.)

Required:

1.

Prepare journal entries to record items (a) through (f) above[ignore item (g) for the moment].
2.

Prepare T-accounts for Manufacturing Overhead and Work in Process.Post the relevant items from your journal entries to theseT-accounts.
3.

Prepare a journal entry for item (g) above.
4.

Compute the unit product cost that will appear on the job costsheet.

JOB ORDER COSTING

The following cost data relate to the manufacture activities ofthe Aquarius Company during 2018:

Manufacturing overhead costs incurred during theyear:

Property taxes $1,500

Utilities, factory 2,500

Indirect labor 5,000

Depreciation,factory 12,000

Insurance, factory 3,000

Total actualcosts $24,000

Other costs incurred during the year:

Purchases of rawmaterials $16,000

Direct labor cost 20,000

Inventories:

Raw materials, January 1, 2018 $ 4,000

Raw materials, December 31, 2018 $ 3,500

Work in Process, January 1, 2018 $ 3,000

Work in process, December 31, 2018 $ 3,750

The company uses a predetermined overhead rate to chargeoverhead cost to production. The rate for 2018 was $ 5.00 permachine hour, a total of 5,000 machine hours were used for theyear.

REQUIRED:

1. Compute the amount of under or over appliedoverhead cost for the year 2018.

2. Prepare a schedule of cost of goods manufacturedfor 2018.

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