ACIS 2116 Study Guide - Midterm Guide: Direct Labor Cost, Chalet, Finished Good
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7 Feb 2020
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Fontaine furniture started and finished job 310 during april. The company"s records show that the following direct materials were requisitioned for job 310: Lumber: 45 units at per unit 45 x = . Padding: 13 yards at per yard 13 x = . Upholstery fabric: 25 yards at per yard 25 x = . Labor time records show the following employees (direct labor) worked on job 310: Penny rawls: 12 hours at per hour 12 x = . Mark frizzell: 16 hours at per hour 16 x = . Total dl = + = . Fontaine allocates manufacturing overhead at a rate of per direct labor hour. Oh applied = x actual activity (28 total hours) = : compute the total amount of direct materials, direct labor, and manufacturing overhead that should be shown on job 310"s job cost record.
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Sweeten Company had no jobs in progress at the beginning ofMarch and no beginning inventories. It started only two jobs duringMarchâJob P and Job Q. Job P was completed and sold by the end ofthe March and Job Q was incomplete at the end of the March. Thecompany uses a plantwide predetermined overhead rate based ondirect labor-hours. The following additional information isavailable for the company as a whole and for Jobs P and Q (all dataand questions relate to the month of March): |
| Estimated total fixed manufacturing overhead | $ | 15,000 |
| Estimated variablemanufacturing overhead per direct labor-hour | $ | 2.00 |
| Estimated totaldirect labor-hours to be worked | 3,000 | |
| Total actualmanufacturing overhead costs incurred | $ | 19,000 |
| Job P | Job Q | |||
| Direct materials | $ | 19,500 | $ | 9,000 |
| Direct labor cost | $ | 31,500 | $ | 7,500 |
| Actual direct labor-hoursworked | 2,100 | 500 | ||
9. Prepare the journal entry to transfer costs from Work inProcess to Finished Goods.
10. Prepare a completed Work in Process T-account including thebeginning and ending balances and all debits and credits posted tothe account.
11. Prepare a schedule of cost of goods sold.
12. Prepare the journal entry to transfer costs from FinishedGoods to Cost of Goods Sold
13. What is the amount of underapplied or overappliedoverhead?
| 14. Prepare the journal entry to close the amount ofunderapplied or overapplied overhead to Cost of Goods Sold 15 Assume that Job P includes 30 units that each sell for $2,800and that the companyâs selling and administrative expenses in Marchwere $10,500. Prepare an absorption costing income statement forMarch |
| Step 1 | You work for Thunderduck Custom Tables Inc. This is the first month of operations. The company designs and manufactures specialty tables. Each table is specially customized for the customer. This month, you have been asked to develop and manufacture two new tables for customers. You will design and build the tables. This is a no nail, no screw, and no glue manufacturing ( no indirect materials used). You will be keeping track of the costs incurred to manufacture the tables. | |||
| The cost of the direct materials that can be used to manufacture the table are as follows. These cost are on a per unit basis. | ||||
| Table Top | $ 1,100.00 | |||
| Table Leg | $ 200.00 | |||
| Drawer | $ 310.00 | |||
| Assume a $25 per hour wage rate to the assembly employees. | ||||
| The company uses a job order costing system and applies manufacturing overhead to jobs based on direct labor hours. | ||||
| The company estimates that there will be 12 direct labor hours worked during the month. | ||||
| The estimated manufacturing overhead cost for the month is: | ||||
| a. | Factory supervisor salary per month | $ 3,000.00 | ||
| b. | Rent for the factory per month | $ 600.00 | ||
| c. | Depreciation of factory equipment per month | $ 600.00 | ||
| Total Estimated manufacturing overhead | $ 4,200.00 | |||
| What is the predetermined manufacturing overhead rate? | ||||
| Step 2 | The first order you received was to manufacture a table using a table top and four legs. This is your Job #1. Go to the "Job #1 Cost Sheet" tab. There are three assembly employees that spend 2 hours each to make the table. Here, you will calculate the cost of making the table by calculating the direct material, direct labor and applied overhead cost. Complete the job cost sheet by calculating the direct material, direct labor and manufacturing overhead applied that would be incurred for job #1. | |||
| Step 3 | The customer that has ordered Job #2, wants a table that is the same as Job #1, but wants to also add a drawer to the table. There are three assembly employees that spend 3 hours each to make the table. On the "Job #2 Cost Sheet" tab you calculate the cost of making the table by calculating the direct material, direct labor and applied overhead cost. | |||
| Step 4 | Here you will find a list of transactions that must be recorded for the company for the month of December. On the "General Journal" tab, you will record all of these entries in proper journal entry format. The following is a list of transactions that need to be recorded for the company for activity in the month of December. Record these in the "General Journal" tab using the proper journal entry format. Please use the following accounts: Accounts Receivables, Raw materials, Work in process, Finished goods, Accumulated depreciation, Accounts payable, Salaries and wages payable, Sales revenue, Manufacturing overhead, Cost of goods sold, Salaries and wages expense, Advertising expenses, and Depreciation expense. | |||
| 1-Dec | Raw Materials purchased on account, $11,000. | |||
| 5-Dec | All Raw Materials needed for Job #1 were requisitioned from the material storage for use during the month. Assume all materials are direct. | |||
| 10-Dec | The following employee costs were incurred but not paid during the month: | |||
| Total cost incurred for direct labor for Job #1 Cost Sheet. | ||||
| Salary for supervisor of the factory $3,500. | ||||
| Administrative Salary $2,000. | ||||
| 15-Dec | All Raw Materials needed for Job #2 were requisitioned from the material storage for use during the month. Assume all materials are direct. | |||
| 16-Dec | Rent for the month of December for the factory building incurred but not paid $600. | |||
| 17-Dec | Advertising costs incurred but not paid for the month was $1,400. | |||
| 20-Dec | Depreciation for the month of December was recorded on equipment was $750 ($150 for equipment used in the factory and the remainder for equipment used in selling and administrative activities). | |||
| 22-Dec | Manufacturing overhead cost was applied based on direct labor hours to Job #1 based on the POHR determined on the "Job Cost Sheet". | |||
| 26-Dec | Job #1 was completed and transferred to Finished Goods during the month. | |||
| 28-Dec | The completed table from Job #1 was sold on account to the customer for $16,000 during the month. (Hint: Make sure to account for the cost of the table that was sold using the cost from the job cost sheet.) | |||
| 31-Dec | Direct labor cost incurred but not paid for three employees to start manufacturing Job #2. The employees only worked one hour each, three hours total during the month and they did not complete their work on the job. | |||
| 31-Dec | Manufacturing overhead cost was applied based on direct labor hours to Job #2 based on the POHR. Only three direct labor hours were worked on Job #2 during the month. | |||
| 31-Dec | Any underapplied or overapplied overhead for the month was closed out to Cost of Goods Sold. | |||
| Step 5 | Post the journal entries that you recorded on the "General Journal" tab to the "T-accounts" tab. This is the company's first month of business, so there will not be any beginning balances. Compute the balance for each T-account after all of the entries have been posted. | |||
| Step 6 | Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold on the "Schedule of COGM and COGS" tab for Job #1 and Job #2 that were worked on during the month by the company. Make sure to follow the format noted in your book (pg. 87). (Hint: This is the company's first month of operations and therefore the beginning balances will be zero.) | |||
| Step 7 | Prepare an Income Statement for the month using the Traditional Format on the "Income Statement" tab. | |||
| Step 8 | Answer the additional questions below | |||
| Check Figure: Cost of Goods Manufactured= $4,150 | ||||
| What is the ending balance for raw materials? | ||||
| What is the ending balance for work in process? | ||||
| What is the ending balance for finished goods? | ||||
| What is the actual manufacturing overhead cost incurred during December? | ||||
| What is the total applied manufacturing overhead cost during December? | ||||
| What is the unadjusted cost of goods sold? | ||||
| Was the manufacturing overhead for the month of December overapplied/underapplied ? | ||||
| What is the amount of Manufacturing overhead overapplied/underapplied? | ||||
| What is the adjusted cost of goods sold? | ||||
| What is gross margin? | ||||
| What is net operating income? | ||||
| What is the total prime cost for Job#1? | ||||
| What is the total conversion cost for job #1? | ||||
| What is the total product cost for job#1? | ||||
| What was the period cost incurred for the month of December? | ||||
| What is the contribution margin for Job #1 (assume that all selling and administrative cost and all manufacturing overhead costs are fixed.)? | ||||
| What would be the actual (not applied) total fixed manufacturing overhead cost incurred for the company for the month if the order in Job #1 is for five tables instead of one table assuming this cost is with in the relevant range? | ||||
| You work for ThunderduckCustom Tables Inc. This is the first month of operations. Thecompany designs and manufactures specialty tables. Each table isspecially customized for the customer. This month, you have beenasked to develop and manufacture two new tables for customers. Youwill design and build the tables. This is a no nail, no screw, andno glue manufacturing ( no indirect materials used). You will bekeeping track of the costs incurred to manufacture the tables. | ||||
| The cost of the directmaterials that can be used to manufacture the table are as follows.These cost are on a per unit basis. | ||||
| Table Top | $ 1,100.00 | |||
| Table Leg | $ 200.00 | |||
| Drawer | $ 310.00 | |||
| Assume a $25 per hour wagerate to the assembly employees. | ||||
| The company uses a job order costing system andapplies manufacturing overhead to jobs based on direct laborhours. | ||||
| The company estimates that there will be 12 directlabor hours worked during the month. | ||||
| The estimated manufacturing overhead cost for themonth is: | ||||
| a. | Factory supervisor salary per month | $ 3,000.00 | ||
| b. | Rent for the factory per month | $ 600.00 | ||
| c. | Depreciation of factory equipment per month | $ 600.00 | ||
| Total Estimated manufacturing overhead | $ 4,200.00 | |||
| What is the predetermined manufacturing overheadrate? | ||||
| Step 2 | The first order you receivedwas to manufacture a table using a table top and four legs. This isyour Job #1. Go to the "Job #1 Cost Sheet" tab. There are threeassembly employees that spend 2 hours each to make the table. Here,you will calculate the cost of making the table by calculating thedirect material, direct labor and applied overhead cost. Completethe job cost sheet by calculating the direct material, direct laborand manufacturing overhead applied that would be incurred for job#1. | |||
| Step 3 | The customer that has orderedJob #2, wants a table that is the same as Job #1, but wants to alsoadd a drawer to the table. There are three assembly employees thatspend 3 hours each to make the table. On the "Job #2 Cost Sheet"tab you calculate the cost of making the table by calculating thedirect material, direct labor and applied overheadcost. | |||
| Step 4 | Here you will find a list oftransactions that must be recorded for the company for the month ofDecember. On the "General Journal" tab, you will record all ofthese entries in proper journal entry format. The following is alist of transactions that need to be recorded for the company foractivity in the month of December. Record these in the "GeneralJournal" tab using the proper journal entry format. Please use thefollowing accounts: Accounts Receivables, Raw materials, Work inprocess, Finished goods, Accumulated depreciation, Accountspayable, Salaries and wages payable, Sales revenue, Manufacturingoverhead, Cost of goods sold, Salaries and wages expense,Advertising expenses, and Depreciation expense. | |||
| 1-Dec | Raw Materials purchased onaccount, $11,000. | |||
| 5-Dec | All Raw Materials needed forJob #1 were requisitioned from the material storage for use duringthe month. Assume all materials are direct. | |||
| 10-Dec | The following employee costswere incurred but not paid during the month: | |||
| Total cost incurred for direct labor for Job #1Cost Sheet. | ||||
| Salary forsupervisor of the factory $3,500. | ||||
| AdministrativeSalary $2,000. | ||||
| 15-Dec | All Raw Materials needed forJob #2 were requisitioned from the material storage for use duringthe month. Assume all materials are direct. | |||
| 16-Dec | Rent for the month of Decemberfor the factory building incurred but not paid $600. | |||
| 17-Dec | Advertising costs incurred butnot paid for the month was $1,400. | |||
| 20-Dec | Depreciation for the month ofDecember was recorded on equipment was $750 ($150 for equipmentused in the factory and the remainder for equipment used in sellingand administrative activities). | |||
| 22-Dec | Manufacturing overhead costwas applied based on direct labor hours to Job #1 based on the POHRdetermined on the "Job Cost Sheet". | |||
| 26-Dec | Job #1 was completed andtransferred to Finished Goods during the month. | |||
| 28-Dec | The completed table from Job#1 was sold on account to the customer for $16,000 during themonth. (Hint: Make sure to account for the cost of the table thatwas sold using the cost from the job cost sheet.) | |||
| 31-Dec | Direct labor cost incurred butnot paid for three employees to start manufacturing Job #2. Theemployees only worked one hour each, three hours total during themonth and they did not complete their work on the job. | |||
| 31-Dec | Manufacturing overhead costwas applied based on direct labor hours to Job #2 based on thePOHR. Only three direct labor hours were worked on Job #2 duringthe month. | |||
| 31-Dec | Any underapplied oroverapplied overhead for the month was closed out to Cost of GoodsSold. | |||
| Step 5 | Post the journal entries thatyou recorded on the "General Journal" tab to the "T-accounts" tab.This is the company's first month of business, so there will not beany beginning balances. Compute the balance for each T-accountafter all of the entries have been posted. | |||
| Step 6 | Prepare a Schedule of Cost ofGoods Manufactured and a Schedule of Cost of Goods Sold on the"Schedule of COGM and COGS" tab for Job #1 and Job #2 that wereworked on during the month by the company. Make sure to follow theformat noted in your book (pg. 87). (Hint: This is the company'sfirst month of operations and therefore the beginning balances willbe zero.) | |||
| Step 7 | Prepare an Income Statement for the month using theTraditional Format on the "Income Statement" tab. | |||
| Step 8 | Answer the additional questions below | |||
| Check Figure: Cost of Goods Manufactured=$4,150 | ||||
| What is the ending balance for raw materials? | ||||
| What is the ending balance for work inprocess? | ||||
| What is the ending balance for finished goods? | ||||
| What is the actual manufacturing overhead costincurred during December? | ||||
| What is the total applied manufacturing overheadcost during December? | ||||
| What is the unadjusted cost of goods sold? | ||||
| Was the manufacturing overhead for the month ofDecember overapplied/underapplied ? | ||||
| What is the amount of Manufacturing overheadoverapplied/underapplied? | ||||
| What is the adjusted cost of goods sold? | ||||
| What is gross margin? | ||||
| What is net operating income? | ||||
| What is the total prime cost for Job#1? | ||||
| What is the total conversion cost for job #1? | ||||
| What is the total product cost for job#1? | ||||
| What was the period cost incurred for the month ofDecember? | ||||
| What is the contributionmargin for Job #1 (assume that all selling and administrative costand all manufacturing overhead costs are fixed.)? | ||||
| What would be the totalincrease in manufacturing cost for the company if the order in Job#1 is for five tables instead of one table? (Hint: Variable costsvary with activity levels.) | ||||
| What would be the actual (not applied) total fixed manufacturingoverhead cost incurred for the company for the month if the orderin Job #1 is for five tables instead of one table assuming thiscost is with in the relevant range? Please help me with all of the steps and questions. | ||||
