Widmer Watercraft’s predetermined overhead rate for year 2013 is 200% of direct labor. Information on the company’s production activities during May 2013 follows.
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Question & Answer: Widmer Watercraft’s predetermined overhead rate for year 2013 is 200% of direct labor. Information on the company’s…..
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a. | Purchased raw materials on credit, $240,000. |
b. | Paid $129,600 cash for factory wages. |
c. | Paid $15,750 cash to a computer consultant to reprogram factory equipment. |
d. | Materials requisitions record use of the following materials for the month. |
Job 136 | $ | 48,500 | |
Job 137 | 33,500 | ||
Job 138 | 19,200 | ||
Job 139 | 22,600 | ||
Job 140 | 6,800 | ||
Total direct materials | 130,600 | ||
Indirect materials | 20,000 | ||
Total materials used | $ | 150,600 | |
e. | Time tickets record use of the following labor for the month. |
Job 136 | $ | 12,100 | |
Job 137 | 10,500 | ||
Job 138 | 37,900 | ||
Job 139 | 39,400 | ||
Job 140 | 3,200 | ||
Total direct labor | 103,100 | ||
Indirect labor | 26,500 | ||
Total | $ | 129,600 | |
f. | Applied overhead to Jobs 136, 138, and 139. |
g. | Transferred Jobs 136, 138, and 139 to Finished Goods. |
h. | Sold Jobs 136 and 138 on credit at a total price of $545,000. |
i. | The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). |
Depreciation of factory building | $ | 69,000 | |
Depreciation of factory equipment | 37,000 | ||
Expired factory insurance | 11,000 | ||
Accrued property taxes payable | 36,500 | ||
j. | Applied overhead at month-end to the Goods in Process (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
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Expert Answer
Solution:
1) Preparing a Job Cost Sheet for Each Job Worked on During the Month:
Job 136 | Job 137 | Job 138 | Job 139 | Job 140 | |
Materials | $48,500 | $33,500 | $19,200 | $22,600 | $6,800 |
Labor | $12,100 | $10,500 | $37,900 | $39,400 | $3,200 |
Overhead (200% of Labor) | $24,200 | $21,000 | $75,800 | $78,800 | $6,400 |
Total Cost | $84,800 | $65,000 | $132,900 | $140,800 | $16,400 |
2) Preparing Journal Entries to Record the Events and Transactions a through j:
Event | General journal | Debit | Credit |
a | Raw Materials Inventory | $240,000 | |
Accounts Payable | $240,000 | ||
b | Factory Payroll | $129,600 | |
Cash | $129,600 | ||
c | Factory Overhead | $15,750 | |
Cash | $15,750 | ||
d | Goods in process inventory | $130,600 | |
Factory overhead | $20,000 | ||
Raw materials inventory | $150,600 | ||
e | Goods in process inventory | $103,100 | |
Factory overhead | $26,500 | ||
Factory payroll | $129,600 | ||
f | Goods in process inventory | $178,800 | |
Factory Overhead | $178,800 | ||
g | Finished Goods Inventory | $358,500 | |
Goods in process inventory | $358,500 | ||
h (1) | Accounts Receivable | $545,000 | |
Sales | $545,000 | ||
h (2) | Cost of goods sold | $217,700 | |
Finished goods inventory | $217,700 | ||
i | Factory Overhead | $153,500 | |
Accum. depreciation – Factory building | $69,000 | ||
Accum. depreciation – Factory equipment | $37,000 | ||
Prepaid insurance | $11,000 | ||
Property taxes payable | $36,500 | ||
j | Goods in process inventory | $27,400 | |
Factory overhead | $27,400 |
3) Preparing T-Accounts for the Each of the Following General Ledger Accounts:
Raw Materials Inventory | |||
a | $240,000 | ||
$150,600 | d | ||
Ending Balance | $89,400 |
Factory Payroll | |||
b | $129,600 | ||
$129,600 | e | ||
Ending Balance | $0 |
Goods In Process Inventory | |||
d | $130,600 | ||
e | $103,100 | ||
f | $178,800 | ||
$358,500 | g | ||
j | $27,400 | ||
Ending Balance | $81,400 |
Factory Overehead | |||
c | $15,750 | ||
d | $20,000 | ||
e | $26,500 | ||
$178,800 | f | ||
i | $153,500 | $27,400 | j |
Ending Balance | $9,550 |
Finished Goods Inventory | |||
g | $358,500 | ||
$217,700 | h | ||
Ending Balance | $140,800 |
Cost of Goods Sold | |||
h | $217,700 | ||
Ending Balance | $217,700 |