An advertising agency uses a job costing system to calculate the cost of client contracts.Contract A42 is one of several contracts undertaken in the last accounting period. Costsassociated with the contract consist of:Direct materials$5,500$14,500Direct expensesDesign staff worked 1,020 hours on contract A42, of which 120 hours were overtime. Onethird of these overtime hours were worked at the request of the client who wanted thecontract to be completed quickly. Overtime is paid at a premium of 25 per cent of thebasic rate of $24.00 per hour.The prime cost of contract A42 is $

Name: An advertising agency uses a job costing system to calculate the cost
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: An advertising agency uses a job costing system to calculate the cost of client contracts.Contract A42 is one of several contracts undertaken in the last accounting period. Costsassociated with the contract consist of:Direct materials$5,500$14,500Di

We have the following information: Advertising Agency uses a job costing system Direct materials…

Business

Accounting

An advertising agency uses a job costing system to calculate the cost of client contracts. Contract A42 is one of several contracts undertaken in the last accounting period. Costs associated with the contract consist of: Direct materials Direct expenses $5,500 $14,500 Design staff worked 1,020 hours on contract A42, of which 120 hours were overtime. One third of these overtime hours were worked at the request of the client who wanted the contract to be completed quickly. Overtime is paid at a premium of 25 per cent of the basic rate of $24.00 per hour. The prime cost of contract A42 is $

An advertising agency uses a job costing system to calculate the cost of client contracts. Contract A42 is one of several contracts undertaken in the last accounting period. Costs associated with the contract consist of: Direct materials Direct expenses $5,500 $14,500 Design staff worked 1,020 hours on contract A42, of which 120 hours were overtime. One third of these overtime hours were worked at the request of the client who wanted the contract to be completed quickly. Overtime is paid at a premium of 25 per cent of the basic rate of $24.00 per hour. The prime cost of contract A42 is $

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

Huron Manufacturing Co. uses a job order cost system to cost its products. It recently signed a new contract with the union that calls for time-and-a-half for all work over 40 hours a week and double-time for Saturday and Sunday. Also, a bonus of 1% of the employees earnings for the year is to be paid to the employees at the end of the fiscal year. The controller, the plant manager, and the sales manager disagree as to how the overtime pay and the bonus should be allocated. An examination of the first months payroll under the new union contract provisions shows the following: Analysis of the supporting payroll documents revealed the following: a. More production was scheduled each day than could be handled in a regular workday, resulting in the need for overtime. b. The Saturday and Sunday hours resulted from rush orders with special contract arrangements with the customers. The controller believes that the overtime premiums and the bonus should be charged to factory overhead and spread over all production of the accounting period, regardless of when the jobs were completed. The plant manager favors charging the overtime premiums directly to the jobs worked on during overtime hours and the bonus to administrative expense. The sales manager states that the overtime premiums and bonus are not factory costs chargeable to regular production but are costs created from administrative policies and, therefore, should be charged only to administrative expense. Required: 1. Evaluate each positionthe controllers, the plant managers, and the sales managers. If you disagree with all of the positions taken, present your view of the appropriate allocation. 2. Prepare the journal entries to illustrate the position you support, including the accrual for the bonus.
Source Documents For each of the following independent situations, give the source document that would be referred to for the necessary information. Required: 1. Direct materials costing 460 are requisitioned for use on a job. 2. Greiners Garage uses a job-order costing system. Overhead is applied to jobs based on direct labor hours. Which source document gives the number of direct labor hours worked on Job 2004-276? 3. Pasilla Investigative Services bills clients on a monthly basis for costs to date. Job 3-48 involved an investigator following the clients business partner for a week by automobile. Mileage is billed at number of miles times 0.75. 4. The foreman on the Jackson job wonders what the actual direct materials cost was for that job.
During the month, Job Arch2 used specialized machinery for 350 hours and incurred $700 in utilities on account. $400 in factory depreciation expense, and $200 in property tax on the factory. Prepare journal entries for the following: A. Record the expenses incurred. B. Record the allocation of overhead at the predetermined rate of $1.50 per machine hour.
Leen Production Co. uses the job order cost system of accounting. The following information was taken from the companys books after all posting had been completed at the end of May: a. Compute the total production cost of each job. b. Prepare the journal entry to transfer the cost of jobs completed to Finished Goods. c. Compute the selling price per unit for each job, assuming a mark-on percentage of 40%. d. Prepare the journal entries to record the sale of Job 1065.
Terrills Transmissions uses a job order cost system. A partial list of the accounts being maintained by the company, with their balances as of November 1, follows: The following transactions were completed during November: a. Materials purchases on account during the month, 74,000. b. Materials requisitioned during the month: 1. Direct materials, 57,000. 2. Indirect materials, 11,000. c. Direct materials returned by factory to storeroom during the month, 1,100. d. Materials returned to vendors during the month prior to payment, 2,500. e. Payments to vendors during the month, 68,500. Required: 1. Prepare general journal entries for each of the transactions. 2. Post the general journal entries to T-accounts. 3. Balance the accounts and report the balances of November 30 for the following: a. Cash b. Materials c. Accounts Payable
A company has the following transactions during the week. Purchase of $3,000 raw materials inventory Assignment of $700 of raw materials inventory to Job 7 Payroll for 10 hours and $3,000 is assigned to Job 7 Factory depreciation of $1,750 Overhead applied at the rate of $200 per hour What is the cost assigned to Job 7 at the end of the week?
Pocono Cement Forms expects $900,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 60,000 or its expected machine hours of 30,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,550 in direct material cost, 90 direct labor hours, and 75 machine hours. Wages are paid at $16 per hour.
Luna Manufacturing Inc. completed Job 2525 on May 31, and there were no jobs in process in the plant. Prior to June 1, the predetermined overhead application rate for June was computed from the following data, based on an estimate of 5,000 direct labor hours: The factory has one production department and uses the direct labor hour method to apply factory overhead. Three jobs are started during the month, and postings are made daily to the job cost sheets from the materials requisitions and labor-time records. The following schedule shows the jobs and amounts posted to the job cost sheets: The factory overhead control account was debited during the month for actual factory overhead expenses of 27,000. On June 11, Job 2526 was completed and delivered to the customer using a mark-on percentage of 50% on manufacturing cost. On June 24, Job 2527 was completed and transferred to Finished Goods. On June 30, Job 2528 was still in process. Required: 1. Prepare job cost sheets for Jobs 2526, 2527, and 2528, including factory overhead applied when the job was completed or at the end of the month for partially completed jobs. 2. Prepare journal entries as of June 30 for the following: a. Applying factory overhead to production. b. Closing the applied factory overhead account. c. Closing the factory overhead account. d. Transferring the cost of the completed jobs to finished goods. e. Recording the cost of the sale and the sale of Job 2526.
K company production was working on Job 1 and Job 2 during the month. Of the $780 in direct materials. $375 in materials was requested for Job 1. Direct labor cost, including payroll taxes, are $23 per hour, and employees worked 18 hours on Job 1 and 29 hours on Job 2. Overhead is applied at the rate of $20 per direct labor hours. Prepare job order cost sheets for each job.
Lorrimer Company has a job-order cost system. The following debits (credits) appeared in the Work-in-Process account for the month of June. During the month of June, direct labor totaled 30,000 and 24,000 of overhead was applied to production. Finished Goods was debited 100,000 during June. Lorrimer Company applies overhead at a predetermined rate of 80% of direct labor cost. Job number 83, the only job still in process at the end of June, has been charged with manufacturing overhead of 3,400. What was the amount of direct materials charged to Job number 83? a. 3,400 b. 4,250 c. 8,350 d. 7,580
Cycle Specialists manufactures goods on a job order basis. During the month of June, three jobs were started in process. (There was no work in process at the beginning of the month.) Jobs Sprinters and Trekkers were completed and sold, on account, during the month (selling prices: Sprinters, 22,000; Trekkers, 27,000); Job Roadsters was still in process at the end of June. The following data came from the job cost sheets for each job. The factory overhead includes a total of 1,200 of indirect materials and 900 of indirect labor. Prepare journal entries to record the following: a. Materials used. b. Factory wages and salaries earned. c. Factory Overhead transferred to Work in Process d. Jobs completed. e. Jobs sold.
The post-closing trial balance of Custer Products, Inc. on April 30 is reproduced as follows: During May, the following transactions took place: a. Purchased raw materials at a cost of 45,000 and general factory supplies at a cost of 13,000 on account (recorded materials and supplies in the materials account). b. Issued raw materials to be used in production, costing 47,000, and miscellaneous factory supplies costing 15,000. c. Recorded the payroll and the payments to employees as follows: factory wages (including 12,000 indirect labor), 41,000; and selling and administrative salaries, 7,000. Additional account titles include Wages Payable and Payroll. (Ignore payroll withholdings and deductions.) d. Distributed the payroll in (c). e. Recognized depreciation for the month at an annual rate of 5% on the building, 10% on the factory equipment, and 20% on the office equipment. The sales and administrative staff uses approximately one-fifth of the building for its offices. f. Incurred other expenses totaling 11,000. One-fourth of this amount is allocable to the office function. g. Transferred total factory overhead costs to Work in Process. h. Completed and transferred goods with a total cost of 91,000 to the finished goods storeroom. i. Sold goods costing 188,000 for 362,000. (Assume that all sales were made on account.) j. Collected accounts receivable in the amount of 345,000. k. Paid accounts payable totaling 158,000. Required: 1. Prepare journal entries to record the transactions. 2. Set up T-accounts. Post the beginning trial balance and the journal entries prepared in (1) to the accounts and determine the balances in the accounts on May 31. 3. Prepare a statement of cost of goods manufactured, an income statement, and a balance sheet. (Round amounts to the nearest whole dollar.)