Southern Rim Parts estimates its manufacturing overhead to be$282,000 and its direct labor costs to be $940,000 for year 1. Thefirst three jobs that Southern Rim worked on had actual directlabor costs of $53,000 for Job 301, $78,000 for Job 302, and$115,000 for Job 303. For the year, actual manufacturing overheadwas $459,000 and total direct labor cost was $846,000.Manufacturing overhead is applied to jobs on the basis of directlabor costs using predetermined rates.
Overhead applied in each of the inventory accounts is asfollows:
Work-in-process inventory $ 25,380 Finished goodsinventory 63,450 Cost of goodssold 164,970
Required:
Prepare an entry to prorate the under- or overapplied overhead.(If no entry is requiredfor a transaction/event, select "No journal entry required" in thefirst account field.)
Southern Rim Parts estimates its manufacturing overhead to be$282,000 and its direct labor costs to be $940,000 for year 1. Thefirst three jobs that Southern Rim worked on had actual directlabor costs of $53,000 for Job 301, $78,000 for Job 302, and$115,000 for Job 303. For the year, actual manufacturing overheadwas $459,000 and total direct labor cost was $846,000.Manufacturing overhead is applied to jobs on the basis of directlabor costs using predetermined rates.
Overhead applied in each of the inventory accounts is asfollows:
| Work-in-process inventory | $ | 25,380 |
| Finished goodsinventory | 63,450 | |
| Cost of goodssold | 164,970 | |
Required:
Prepare an entry to prorate the under- or overapplied overhead.(If no entry is requiredfor a transaction/event, select "No journal entry required" in thefirst account field.)
Related questions
Exercise 7-28 Prorate Over- or Underapplied Overhead (LO 7-3)Aspen Company estimates its manufacturing overhead to be $516,000and its direct labor costs to be $516,000 for year 2. Aspen workedon three jobs for the year. Job 2-1, which was sold during year 2,had actual direct labor costs of $205,125. Job 2-2, which wascompleted, but not sold at the end of the year, had actual directlabor costs of $467,685. Job 2-3, which is still in work-in-processinventory, had actual direct labor costs of $147,690. Actualmanufacturing overhead for year 2 was $828,200. Manufacturingoverhead is applied on the basis of direct labor costs.
| Required: |
| Prepare an entry to allocateover- or underapplied overhead to Work in Process, Finished Goodsand Cost of Goods Sold. |
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 totalfixed manufacturing overhead | $ | 11,500 |
| Estimated variable manufacturingoverhead per direct labor-hour | $ | 1.30 |
| Estimated total directlabor-hours to be worked | 2,300 | |
| Total actual manufacturingoverhead costs incurred | $ | 14,000 |
| Job P | Job Q | |||
| Direct materials | $ | 14,500 | $ | 8,300 |
| Direct labor cost | $ | 19,600 | $ | 9,100 |
| Actual direct labor-hoursworked | 1,400 | 650 | ||
2. How much manufacturing overhead was applied to Job P and JobQ? (Round your intermediate calculations to 2 decimal places.)
3.
What is the direct labor hourly wage rate
4-a.
If Job P includes 20 units, what is its unit product cost?
4-b.
What is the total amount of manufacturing cost assigned to Job Qas of the end of March (including applied overhead)?
5.
Assume the ending raw materials inventory is $1,300 and thecompany does not use any indirect materials. Prepare the journalentries to record raw materials purchases and the issuance ofdirect materials for use in production. (If no entry is requiredfor a transaction/event, select "No journal entry required" in thefirst account field.)
6.
Assume that the company does not use any indirect labor. Preparethe journal entry to record the direct labor costs added toproduction. (If no entry is required for a transaction/event,select "No journal entry required" in the first accountfield.)v
7.
Prepare the journal entry to apply manufacturing overhead coststo production. (If no entry is required for a transaction/event,select "No journal entry required" in the first account field.)
8.
Assume the ending raw materials inventory is $1,300 and thecompany does not use any indirect materials. Prepare a schedule ofcost of goods manufactured.
9.
Prepare the journal entry to transfer costs from Work in Processto Finished Goods. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.
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 Finished Goodsto Cost of Goods Sold. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)
13.
What is the amount of underapplied or overapplied overhead?
14.
Prepare the journal entry to close the amount of underapplied oroverapplied overhead to Cost of Goods Sold. (If no entry isrequired for a transaction/event, select "No journal entryrequired" in the first account field.
15.
Assume that Job P includes 20 units that each sell for $3,500and that the companyâs selling and administrative expenses in Marchwere $20,500. Prepare an absorption costing income statement forMarch.
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 |
