Durham Company uses a job-ordercosting system. The following transactions took place lastyear:
a. Raw materials requisitioned foruse in production, $52,000 (80% direct and 20% indirect). b. Factory utility costs incurred,$15,800. c. Depreciation recorded on plant and equipment, $30,400.Three-fourths of the depreciation relates to factory equipment, andthe remainder relates to selling and administrative equipment.
d. Costs for salaries and wageswere incurred as follows:
Direct labor $ 52,000 Indirect labor $ 19,200 Salescommissions $ 11,200 Administrativesalaries $ 37,000
e. Insurance costs incurred, $5,400 (80% relates to factoryoperations, and 20% relates to selling and administrativeactivities).
f. Miscellaneous selling andadministrative expenses incurred, $19,200. g. Manufacturing overhead was applied to production. The companyapplies overhead on the basis of 130% of direct labor cost.
h. Goods that cost $142,000 to manufacture according to their jobcost sheets were transferred to the finished goods warehouse.
i. Goods that had cost $132,000 tomanufacture according to their job cost sheets were sold for$224,000.
Required: 1. Determine the underapplied oroverapplied overhead for the year.
2. Prepare an income statementfor the year. (Hint: No calculations are required to determine thecost of goods sold before any adjustment for underapplied oroverapplied overhead.)
| Durham Company uses a job-ordercosting system. The following transactions took place lastyear: |
| a. | Raw materials requisitioned foruse in production, $52,000 (80% direct and 20% indirect). | |||||||||||||||||||||||||||||
| b. | Factory utility costs incurred,$15,800. | |||||||||||||||||||||||||||||
| c. | Depreciation recorded on plant and equipment, $30,400.Three-fourths of the depreciation relates to factory equipment, andthe remainder relates to selling and administrative equipment. | |||||||||||||||||||||||||||||
| d. | Costs for salaries and wageswere incurred as follows:
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Related questions
Yu Technology Co. manufactures CDs and DVDs for computer software and entertainment companies. Yu uses job order costing and has a perpetual inventory system. The business has a highly labour intensive production process, so it applies manufacturing overhead to jobs based on direct labour cost. Yu expects to incur $1,080,000 0f manufacturing overhead costs and estimated direct labour costs of $900,000 during 2015. At the end of March 2015,
Yu Technology reported work in process inventory of $15,000
During April 2015, Yu Technology recorded the following transactions.
1) Materials requisitioned for use in production:
Direct materials: $120,000
Indirect materials: $20,000
2) Advertising costs were incurred, $15,000.
3) Salaries and wages incurred as follows:
Direct labour $121,875
Indirect labour $40,625
Selling and administrative salaries $ 25,000
4) Insurance expired during the year, $30,000 (90% relates to the factory, the remainder is on selling and administrative items).
5) Depreciation recorded for the year, $80,000 (75% relates to factory assets and the remainder relates to selling and administrative assets).
6) Utilities expense incurred, $53,750 (80% of this amount relates to the factory, the remainder relates to the administrative offices).
7) Applied manufacturing overhead costs to jobs
8) Two jobs were completed with total costs of $120,000 & $85,000 respectively. They were sold on account at a mark-up of 75% on cost.
All purchases and services were acquired on account.
| (d) Record a journal entry to close manufacturing overhead to cost of goods sold. | ||||||||
| (e) Prepare an income statement for the year | ||||||||
| (f) Determine the balance in work in process inventory on April 30. | ||||||||
Ravsten Company uses a job-order costing system.
The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 45,000 machine-hours and incur $211,500 in manufacturing overhead cost. The following transactions occurred during the year:
a. Raw materials requisitioned for use in production, $243,000 (70% direct and 30% indirect).
b. The following costs were incurred for employee services:
| Direct labor | $ | 169,000 | |
| Indirect labor | $ | 27,000 | |
| Sales commissions | $ | 19,000 | |
| Administrative salaries | $ | 34,000 | |
c. Heat, power, and water costs incurred in the factory, $50,000.
d. Insurance costs, $19,000 (80% relates to factory operations, and 20% relates to selling and administrative activities).
e. Advertising costs incurred, $59,000.
f. Depreciation recorded for the year, $69,000 (75% relates to factory operations, and 25% relates to selling and administrative activities).
g. The company used 49,000 machine-hours during the year.
h. Goods that cost $489,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
i. Sales for the year totaled $718,000. The total cost to manufacture these goods according to their job cost sheets was $484,000.
Required:
1. Determine the underapplied or overapplied overhead for the year. (Round predetermined overhead rate to 2 decimal places.).
2. Prepare an income statement for the year. (Hint: No calculations are required to determine the cost of goods sold before any adjustment for underapplied or overapplied overhead.) (Round predetermined overhead rate to 2 decimal places.)
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