Discussion Question Job Costing I The Harriott manufacturing company uses job order costing system. The company uses machine hours to apply overhead cost to jobs. At the beginning of 2020, the company estimated that 31,40o machine hours would be worked and $5,024,000 overhead cost would be incurred during 2020. The following activities took place in the work in process inventory during February: WIP Inventory A/C November 1 Bal. b/f $51,250 Direct Materials Used 256,400 Other transactions incurred: Indirect material issued to production was $40,360 Total manufacturing labour incurred in November was $368,000, 75% of this amount represented direct labour. Other manufacturing overhead costs incurred for November amounted to $340,490. Two jobs were completed with total costs of $384,000 & $270,000 respectively. They were sold on account at a margin of 33%% on sales. Required: i) ii) Compute Harriott's predetermined manufacturing overhead rate for 2020. State the journal entries necessary to record the above transactions in the general journal: a) For direct materials used in November b) For indirect material issued to production in November c) For total manufacturing labour incurred in November d) To assign manufacturing labour to the appropriate accounts e) For other manufacturing overhead incurred f) For manufacturing overhead applied to production for November, given that Harriott manufacturing company worked 2,860 machine hours. g) To move the completed jobs into finished goods inventory h) To sell the two completed jobs on account Calculate the manufacturing overhead variance for Harriott and state the journal entries necessary to dispose of the variance. iii) iv) What is balance on the Cost of Goods Sold account after the adjustment v) Calculate the gross profit earned by Harriott on the jobs completed. vi) Determine the balance in work in process inventory on November 30.

22nd Edition

ISBN:9781305666160

Author:James A. Heintz, Robert W. Parry

Publisher:James A. Heintz, Robert W. Parry

Chapter26: Manufacturing Accounting: The Job Order Cost System

Section: Chapter Questions

Problem 10SPA: JOB ORDER COSTING WITH UNDER- AND OVERAPPLIED FACTORY OVERHEAD M. Evans Sons manufactures parts for...

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Question (ii) Please to show working on how you arrived with the answers in the Journal entry

also I need answer for (iv) along with working out .

Please also take into consideration the following when approaching the questions:

To record materials issued (Direct & Indirect) – Dr. WIP (Direct); Dr. Manufacturing O/H (Indirect); Cr Material Inventory
Manufacturing Wages/Labour - Note that there are two ways of journalizing this cost

· First Dr Manufacturing Wages; Cr Wages Payable; Then Dr WIP (Direct), Dr MO (Indirect), Cr Manufacturing Wages

· Leave out Manufacturing Wages: Dr WIP (Direct), Dr MO (Indirect), Cr Wages Payable

NOTE: Wages Payable may also be referred to as Accrued Wages or Accrued Payroll

To record Other Manufacturing O/H Costs- Dr Manufacturing O/H; Cr Various A/Cs e.g. Prepaid Insurance, Accumulated Depreciation, Cash etc.
To record Manufacturing O/H Applied: Dr WIP; Cr Manufacturing O/H
To record Finished Goods: Dr FG; Cr WIP
To record Units Sold (Assume Perpetual Inventory System unless told otherwise) this means that there must be two sets of journal entries: Dr COGS, Cr Inventory and Dr Accounts Receivable/Cash, Cr Sales Revenue
Manufacturing O/H Variance is charged to COGS.
When determining whether MOHs were over or under applied, use a T-account not a statement (see e-tutor presentation)