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Novak makes and sells milkshakes in individual-sized serving containers. Its most popular flavors are strawberry, caramel, chocolate, and vanilla. Due to its automated processes, it uses machine hours as its cost driver, and the company determines a budgeted MOH rate at the beginning of the year. This year's rate is estimated at $1.25/machine hour. The following events occurred this year (amounts are in thousands). 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Purchased milk, sugar, flavorings, and other ingredients ($431 direct/$41 indirect) Transferred direct materials into production Incurred direct labor cost for factory workers Transferred indirect materials into production Incurred salary for factory supervisors Received utility bill for factory Incurred labor cost for maintenance employees in factory Applied MOH based on 276,000 actual machine hours used Recorded cost of goods completed Recognized revenue for milkshakes sold on account Recognized Cost of Goods Sold associated with units sold The following balances existed in these accounts at the beginning of the year. RM Inventory $322 ($241 direct materials, $81 indirect materials) WIP Inventory FG Inventory 411 261 $472 521 386 53 146 29 66 ? 1,381 2,648 1,556

Novak makes and sells milkshakes in individual-sized serving containers. Its most popular flavors are strawberry, caramel, chocolate, and vanilla. Due to its automated processes, it uses machine hours as its cost driver, and the company determines a budgeted MOH rate at the beginning of the year. This year's rate is estimated at $1.25/machine hour. The following events occurred this year (amounts are in thousands). 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Purchased milk, sugar, flavorings, and other ingredients ($431 direct/$41 indirect) Transferred direct materials into production Incurred direct labor cost for factory workers Transferred indirect materials into production Incurred salary for factory supervisors Received utility bill for factory Incurred labor cost for maintenance employees in factory Applied MOH based on 276,000 actual machine hours used Recorded cost of goods completed Recognized revenue for milkshakes sold on account Recognized Cost of Goods Sold associated with units sold The following balances existed in these accounts at the beginning of the year. RM Inventory $322 ($241 direct materials, $81 indirect materials) WIP Inventory FG Inventory 411 261 $472 521 386 53 146 29 66 ? 1,381 2,648 1,556

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 20E: Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc.,...
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Novak makes and sells milkshakes in individual-sized serving containers. Its most popular flavors are strawberry, caramel, chocolate, and vanilla. Due to its automated processes, it uses machine hours as its cost driver, and the company determines a budgeted MOH rate at the beginning of the year. This year's rate is estimated at $1.25/machine hour. The following events occurred this year (amounts are in thousands). 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Purchased milk, sugar, flavorings, and other ingredients ($431 direct/$41 indirect) Transferred direct materials into production Incurred direct labor cost for factory workers Transferred indirect materials into production Incurred salary for factory supervisors Received utility bill for factory Incurred labor cost for maintenance employees in factory Applied MOH based on 276,000 actual machine hours used Recorded cost of goods completed Recognized revenue for milkshakes sold on account Recognized Cost of Goods Sold associated with units sold The following balances existed in these accounts at the beginning of the year. RM Inventory $322 ($241 direct materials, $81 indirect materials) WIP Inventory FG Inventory 411 261 $472 521 386 53 146 29 66 ? 1,381 2.648 1.556
Transcribed Image Text:Novak makes and sells milkshakes in individual-sized serving containers. Its most popular flavors are strawberry, caramel, chocolate, and vanilla. Due to its automated processes, it uses machine hours as its cost driver, and the company determines a budgeted MOH rate at the beginning of the year. This year's rate is estimated at $1.25/machine hour. The following events occurred this year (amounts are in thousands). 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Purchased milk, sugar, flavorings, and other ingredients ($431 direct/$41 indirect) Transferred direct materials into production Incurred direct labor cost for factory workers Transferred indirect materials into production Incurred salary for factory supervisors Received utility bill for factory Incurred labor cost for maintenance employees in factory Applied MOH based on 276,000 actual machine hours used Recorded cost of goods completed Recognized revenue for milkshakes sold on account Recognized Cost of Goods Sold associated with units sold The following balances existed in these accounts at the beginning of the year. RM Inventory $322 ($241 direct materials, $81 indirect materials) WIP Inventory FG Inventory 411 261 $472 521 386 53 146 29 66 ? 1,381 2.648 1.556
(c) Post your journal entries to all inventory and Cost of Goods Sold accounts, and then calculate ending balances for each. (Enter amounts in thousands. Post entries in the order of journal entries presented in the previous part.) Actual Raw Materials Inventory 472 472 WIP Inventory FG Inventory COGS MOH Control Applied
Transcribed Image Text:(c) Post your journal entries to all inventory and Cost of Goods Sold accounts, and then calculate ending balances for each. (Enter amounts in thousands. Post entries in the order of journal entries presented in the previous part.) Actual Raw Materials Inventory 472 472 WIP Inventory FG Inventory COGS MOH Control Applied
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