BUSACC 0040 Chapter Notes - Chapter 3: Direct Labor Cost, Finished Good, Income Statement
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The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the companyâs fiscal year. |
a. | Raw materials purchased on account, $210,000. |
b. | Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials). |
c. | Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000. |
d. | Depreciation recorded on factory equipment, $40,000. |
e. | Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable). |
f. | The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October. |
g. | Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. |
h. | Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost. |
Required: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1. | Prepare journal entries to record the information given above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Raw materials purchased on account 210,000 Transaction General Journey Debit Credit A Raw materials issued to production, $119,000 ($178,000 direct materials and $12,000 indirect materials) Transaction General Journey Debit Credit B Direct Labor Cost incurred, $90,000; indirect labor cost incurred, $110,000 Transaction General Journey Debit Credit C Depreciation recorded on factory equipment, $40,000 Transaction General Journey Debit Credit D Other man ufacturing overhead cost incrred during October $70,000 (credit Accounts Payable) Transaction General Journey Debit Credit E The company applies manufactring overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October Transaction General Journey Debit Credit F. Production orders costing $520,000 according to their job cost sheets were completed during october and transferred to Finished goods Transaction General Journey Debit Credit G. Record the cost of goods sold Transaction General Journey Debit Credit H(1) REcord the sales account Transaction General Journey Debit Credit h(2)
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Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $520,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $22,000; factory rent, $36,000; factory utilities, $25,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 29,000 | $ | 36,000 | ||||||||
Direct labor | 24,000 | 15,000 | ||||||||||
Applied overhead | 12,000 | 7,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 135,000 | 215,000 | $ | 115,000 | ||||||||
Direct labor | 103,000 | 151,000 | 103,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 1
Required:
1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $520,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $22,000; factory rent, $36,000; factory utilities, $25,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 29,000 | $ | 36,000 | ||||||||
Direct labor | 24,000 | 15,000 | ||||||||||
Applied overhead | 12,000 | 7,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 135,000 | 215,000 | $ | 115,000 | ||||||||
Direct labor | 103,000 | 151,000 | 103,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 2
Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 306 and 307 to Finished Goods Inventory.
Cost of goods sold for Job 306.
Revenue from the sale of Job 306.
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
2. Prepare journal entries for the month of April to record the above transactions. 1-13
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $520,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $22,000; factory rent, $36,000; factory utilities, $25,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 29,000 | $ | 36,000 | ||||||||
Direct labor | 24,000 | 15,000 | ||||||||||
Applied overhead | 12,000 | 7,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 135,000 | 215,000 | $ | 115,000 | ||||||||
Direct labor | 103,000 | 151,000 | 103,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 3
3. Prepare a schedule of cost of goods manufactured.
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $520,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $22,000; factory rent, $36,000; factory utilities, $25,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 29,000 | $ | 36,000 | ||||||||
Direct labor | 24,000 | 15,000 | ||||||||||
Applied overhead | 12,000 | 7,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 135,000 | 215,000 | $ | 115,000 | ||||||||
Direct labor | 103,000 | 151,000 | 103,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 4
4.1 Compute gross profit for April.
4.2 Show how to present the inventories on the April 30 balance sheet.
[The following information applies to the questions displayed below.]
Marcelino Co.'s March 31 inventory of raw materials is $81,000. Raw materials purchases in April are $530,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $60,000; indirect labor, $20,000; factory rent, $35,000; factory utilities, $21,000; and factory equipment depreciation, $59,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $675,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 27,000 | $ | 45,000 | ||||||||
Direct labor | 21,000 | 19,000 | ||||||||||
Applied overhead | 10,500 | 9,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 139,000 | 215,000 | $ | 105,000 | ||||||||
Direct labor | 103,000 | 152,000 | 104,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 1
Required:
1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).
[The following information applies to the questions displayed below.]
Marcelino Co.'s March 31 inventory of raw materials is $81,000. Raw materials purchases in April are $530,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $60,000; indirect labor, $20,000; factory rent, $35,000; factory utilities, $21,000; and factory equipment depreciation, $59,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $675,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 27,000 | $ | 45,000 | ||||||||
Direct labor | 21,000 | 19,000 | ||||||||||
Applied overhead | 10,500 | 9,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 139,000 | 215,000 | $ | 105,000 | ||||||||
Direct labor | 103,000 | 152,000 | 104,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 2
Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 306 and 307 to Finished Goods Inventory.
Cost of goods sold for Job 306.
Revenue from the sale of Job 306.
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
2. Prepare journal entries for the month of April to record the above transactions.
[The following information applies to the questions displayed below.]
Marcelino Co.'s March 31 inventory of raw materials is $81,000. Raw materials purchases in April are $530,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $60,000; indirect labor, $20,000; factory rent, $35,000; factory utilities, $21,000; and factory equipment depreciation, $59,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $675,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 27,000 | $ | 45,000 | ||||||||
Direct labor | 21,000 | 19,000 | ||||||||||
Applied overhead | 10,500 | 9,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 139,000 | 215,000 | $ | 105,000 | ||||||||
Direct labor | 103,000 | 152,000 | 104,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 3
3. Prepare a schedule of cost of goods manufactured.
[The following information applies to the questions displayed below.]
Marcelino Co.'s March 31 inventory of raw materials is $81,000. Raw materials purchases in April are $530,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $60,000; indirect labor, $20,000; factory rent, $35,000; factory utilities, $21,000; and factory equipment depreciation, $59,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $675,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 | Job 307 | Job 308 | ||||||||||
Balances on March 31 | ||||||||||||
Direct materials | $ | 27,000 | $ | 45,000 | ||||||||
Direct labor | 21,000 | 19,000 | ||||||||||
Applied overhead | 10,500 | 9,500 | ||||||||||
Costs during April | ||||||||||||
Direct materials | 139,000 | 215,000 | $ | 105,000 | ||||||||
Direct labor | 103,000 | 152,000 | 104,000 | |||||||||
Applied overhead | ? | ? | ? | |||||||||
Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 4
4.1 Compute gross profit for April.