Widmer Watercraft’s predetermined overhead rate for year 2015 is 200% of direct labor. Information on the company’s production activities during May 2015 follows.
|
| a. | Purchased raw materials on credit, $200,000. |
| b. | Materials requisitions record use of the following materials for the month. |
| Job 136 | $ | 48,500 | |
| Job 137 | 33,000 | ||
| Job 138 | 19,600 | ||
| Job 139 | 22,600 | ||
| Job 140 | 7,200 | ||
| Total direct materials | 130,900 | ||
| Indirect materials | 21,000 | ||
| Total materials used | $ | 151,900 | |
| c. | Paid $16,000 cash to a computer consultant to reprogram factory equipment. |
| d. | Time tickets record use of the following labor for the month. These wages were paid in cash. |
| Job 136 | $ | 12,200 | |
| Job 137 | 10,600 | ||
| Job 138 | 37,900 | ||
| Job 139 | 39,000 | ||
| Job 140 | 4,000 | ||
| Total direct labor | 103,700 | ||
| Indirect labor | 25,000 | ||
| Total | $ | 128,700 | |
| e. | Applied overhead to Jobs 136, 138, and 139. |
| f. | Transferred Jobs 136, 138, and 139 to Finished Goods. |
| g. | Sold Jobs 136 and 138 on credit at a total price of $535,000. |
| h. | The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). |
| Depreciation of factory building | $ | 68,500 | |
| Depreciation of factory equipment | 36,500 | ||
| Expired factory insurance | 11,000 | ||
| Accrued property taxes payable | 36,000 | ||
| i. |
Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
|
| Required: | |
| 1. |
Prepare a job cost sheet for each job worked on during the month.
|
| 2. |
Prepare journal entries to record the events and transactions a through i.
|
| e. | To apply overhead to jobs: [($12,200 + $37,900 + $39,000) × 200%] = $178,200 |
| f. | To record completion of jobs: ($85,100 + $133,300 + $139,600) = $358,000 |
| (g)2. | To record cost of sales: ($85,100 + $133,300) = $218,400 |
| i. | To apply overhead to jobs: [($10,600 + $4,000) × 200%] = $29,200 |
| 3. |
Prepare T-accounts for each of the following general ledger accounts, each of which started the month with a zero balance: Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Factory Payroll, Factory Overhead, Cost of Goods Sold. Post the journal entries from Part 2 to the following T-accounts
|
| 4. |
Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Work in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.
|
