Bakerston Company is a manufacturing firm that uses job-ordercosting. The company's inventory balances were as follows at thebeginning and end of the year:
Beginning
Balance Ending
Balance Raw materials $ 11,700 $ 15,800 Work in process $ 32,700 $ 14,600 Finished goods $ 102,000 $ 121,000
The company applies overhead to jobs using a predeterminedoverhead rate based on machine-hours. At the beginning of the year,the company estimated that it would work 17,500 machine-hours andincur $262,500 in manufacturing overhead cost. The followingtransactions were recorded for the year:
⢠Raw materials were purchased,$415,000. ⢠Raw materials were requisitioned for use in production, $410,900($382,000 direct and $28,900 indirect).
⢠The following employee costs were incurred: direct labor,$332,000; indirect labor, $71,000; and administrative salaries,$154,000.
⢠Selling costs, $115,000. ⢠Factory utility costs,$27,000. ⢠Depreciation for the year was $124,000 of which $110,000 isrelated to factory operations and $14,000 is related to selling,general, and administrative activities.
⢠Manufacturing overhead was applied to jobs. The actual level ofactivity for the year was 14,200 machine-hours.
⢠Sales for the year totaled$1,283,000.
Required: a. Prepare a schedule of cost of goods manufactured in good form.(Do not round predetermined overhead rate. Input allamounts as positive values.)
b. Was the overhead underapplied or overapplied? By how much?(Do not round predetermined overhead rate. Input the amountas a positive value.)
c. Prepare an income statement for the year. The company closes anyunderapplied or overapplied overhead to Cost of Goods Sold.(Input all amounts as positive values.)
Bakerston Company is a manufacturing firm that uses job-ordercosting. The company's inventory balances were as follows at thebeginning and end of the year: |
| Beginning Balance | Ending Balance | |||||
| Raw materials | $ | 11,700 | $ | 15,800 | ||
| Work in process | $ | 32,700 | $ | 14,600 | ||
| Finished goods | $ | 102,000 | $ | 121,000 | ||
The company applies overhead to jobs using a predeterminedoverhead rate based on machine-hours. At the beginning of the year,the company estimated that it would work 17,500 machine-hours andincur $262,500 in manufacturing overhead cost. The followingtransactions were recorded for the year: |
| ⢠| Raw materials were purchased,$415,000. |
| ⢠| Raw materials were requisitioned for use in production, $410,900($382,000 direct and $28,900 indirect). |
| ⢠| The following employee costs were incurred: direct labor,$332,000; indirect labor, $71,000; and administrative salaries,$154,000. |
| ⢠| Selling costs, $115,000. |
| ⢠| Factory utility costs,$27,000. |
| ⢠| Depreciation for the year was $124,000 of which $110,000 isrelated to factory operations and $14,000 is related to selling,general, and administrative activities. |
| ⢠| Manufacturing overhead was applied to jobs. The actual level ofactivity for the year was 14,200 machine-hours. |
| ⢠| Sales for the year totaled$1,283,000. |
| Required: | |||||
| a. | Prepare a schedule of cost of goods manufactured in good form.(Do not round predetermined overhead rate. Input allamounts as positive values.)
| ||||
Related questions
Part 1:
Granite Company uses a job order costing system. The companyapplied manufacturing overhead to jobs using a predeterminedoverhead rate based on direct labor hours. Last year, manufacturingoverhead and direct labor hours were estimated at $80,000 and16,000 hours respectively, for the year. In June, Job #315 wascompleted. Material cost on the job totaled $1,500 and labor costtotaled $2,400 at $6 per hour. At the end of the year, it wasdetermined that the company worked 15,000 direct labor hours forthe year, and incurred $78,000 in actual manufacturing overheadcosts.
Required: (Please show work)
1. Determine the predetermined overhead rate for the year.
2. Determine the amount of overhead charged to jobs during theyear
3. Determine the amount of underapplied or overapplied overheadfor the year.
4. Assuming that 100 units were completed, determine the unitcost that would appear on the job cost sheet for Job #315.
Part II:
Alake Company is a manufacturing firm that uses job ordercosting. At the beginning of the year, the companyâs inventorybalances were as follows:
RawMaterials $19,000
Work inProcess $82,000
FinishedGoods $32,000
The company applied overhead to jobs using a predeterminedoverhead rate based on machine hours. At the beginning of the year,the company estimated that it would work 36,000 machine hours andincur $216,000 in manufacturing overhead cost. The followingtransactions were recorded for the year:
Required:
Prepare the appropriate journal entry for each of the itemsabove. You can assume that all transactions with employees,customers, and suppliers were conducted in cash.
a. Raw Materials were purchased $443,000.
Account Title | Debit | Credit |
b. Raw materials were requisitioned for use in production,$450,000 ($435,000 direct and $15,000 indirect).
Account Title | Debit | Credit |
c. The following employee costs were incurred:
Directlabor $229,000
Indirectlabor $ 54,000
Administrativesalaries $117,000
Account Title | Debit | Credit |
d. Selling costs, $119,000
Account Title | Debit | Credit |
e. Factory utility costs, $21,000
Account Title | Debit | Credit |
f. Depreciation for the year was $121,000 of which $114,000 isrelated to factory operations and $7,000 is related to selling,general and administrative activities.
Account Title | Debit | Credit |
g. Manufacturing overhead was applied to jobs. The actual levelof activity for the year was 38,000 machine hours.
Account Title | Debit | Credit |
h. The cost of goods manufactured for the year was $910,000
Account Title | Debit | Credit |
i. Sales for the year totaled $1,173,000 and the costs on thejob cost sheets of the goods that were sold totaled $895,000.
Account Title | Debit | Credit |
j. The balance in the Manufacturing Overhead account was closedto Cost of Goods Sold.
Account Title | Debit | Credit |
