Keezel Company uses normal costing in its job-costing system. Partially completed T-accounts and additional information for Keezel for 2017 are as follows: a. Direct manufacturing labor wage rate was $15 per hour. b. Manufacturing overhead was allocated at $20 per direct manufacturing labor-hour. c. During the year, sales revenues were $1,550,000, and marketing and distribution costs were $810,000. Question 1. What was the amount of direct materials issued to production during 2017? 2. What was the amount of manufacturing overhead allocated to jobs during 2017? 3. What was the total cost of jobs completed during 2017? 4. What was the balance of work-in-process inventory on December 31, 2017? 5. What was the cost of goods sold before proration of under- or overallocated overhead? 6. What was the under- or overallocated manufacturing overhead in 2017? 7. Dispose of the under- or overallocated manufacturing overhead using the following: a. Write-off to Cost of Goods Sold b. Proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold 8. Using each of the approaches in requirement 7, calculate Keezel's operating income for 2017. 9. Which approach in requirement 7 do you recommend Keezel use? Explain your answer briefly.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter10: Accounting Systems For Manufacturing Operations

Section: Chapter Questions

Problem 10.9E: Recording issuing of materials Materials issued for the current month are as follows a. Determine...

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Keezel Company uses normal costing in its job-costing system. Partially completed T-accounts and additional information for Keezel for 2017 are as follows:

a.	Direct manufacturing labor wage rate was $15 per hour.
b.	Manufacturing overhead was allocated at $20 per direct manufacturing labor-hour.
c.	During the year, sales revenues were $1,550,000, and marketing and distribution costs were $810,000.

Question

1.	What was the amount of direct materials issued to production during 2017?
2.	What was the amount of manufacturing overhead allocated to jobs during 2017?
3.	What was the total cost of jobs completed during 2017?
4.	What was the balance of work-in-process inventory on December 31, 2017?
5.	What was the cost of goods sold before proration of under- or overallocated overhead?
6.	What was the under- or overallocated manufacturing overhead in 2017?
7.	Dispose of the under- or overallocated manufacturing overhead using the following:
	a.	Write-off to Cost of Goods Sold
b.	Proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold
8.	Using each of the approaches in requirement 7, calculate Keezel's operating income for 2017.
9.	Which approach in requirement 7 do you recommend Keezel use? Explain your answer briefly.

T-accounts
Direct Materials Control
Work-in-Process Control
Finished Goods Control
1-1-2017
42,000
148,000
1-1-2017
82,000
1-1-2017
105,000
700,000
135,000
Dir. Manuf.
705,000
labor
285,000
Manufacturing Overhead Control
Manufacturing Overhead Allocated
Cost of Goods Sold
425,000
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