Answer #2: a-b only Problem 5Star Wars Corporation obtains the following information from its records for themonth of August:Jobs completed and soldJob 220P 15,000 P 25,00050,00030,0004,00025%Job 110Direct materials costDirect labor costJob 330P 20,00030,00020,000Factory overheadUnits manufactured40,00025,0005,00020%10,000GP rate (based on sales)Required:30%1. Prepare in summary form, the journal entries that would have been madering the month to record the above.2. Prepare the schedules showing the gross profit or loss for August.a. For the business as a whole.b. For each job completed and sold.

Gross Profit- Gross profit, also recognized as gross income, equals a corporation's revenues minus…

Problem 5 Star Wars Corporation obtains the following information from its records for the month of August: Jobs completed and sold Job 220 P 15,000 P 25,000 50,000 30,000 Job 110 Direct materials cost Direct labor cost Job 330 P 20,000 30,000 20.000 40,000 25,000 Factory overhead

Problem 5 Star Wars Corporation obtains the following information from its records for the month of August: Jobs completed and sold Job 220 P 15,000 P 25,000 50,000 30,000 Job 110 Direct materials cost Direct labor cost Job 330 P 20,000 30,000 20.000 40,000 25,000 Factory overhead

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter4: Job-order Costing And Overhead Application

Section: Chapter Questions

Problem 62P: (Appendix 4A) Overhead Application, Journal Entries, Job Cost At the beginning of the year, Smith...

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Question

Answer #2: a-b only

Problem 5
Star Wars Corporation obtains the following information from its records for the
month of August:
Jobs completed and sold
Job 220
P 15,000 P 25,000
50,000
30,000
4,000
25%
Job 110
Direct materials cost
Direct labor cost
Job 330
P 20,000
30,000
20,000
Factory overhead
Units manufactured
40,000
25,000
5,000
20%
10,000
GP rate (based on sales)
Required:
30%
1. Prepare in summary form, the journal entries that would have been made
ring the month to record the above.
2. Prepare the schedules showing the gross profit or loss for August.
a. For the business as a whole.
b. For each job completed and sold.

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Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $3,000 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesn't make any sense to me. It tells me that every labor hour carries an additional burden of $3,000. This means that while direct labor makes up only 5% of our total product cost, it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won't be surprised if next year the rate is $4,000 per direct labor hour. I'm also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30~minute error in our estimate of assembly time is worth $ 1,500. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. What do you think is a possible solution?
Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $3,000 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesn't make any sense to me. It tells me that every labor hour carries an additional burden of $3,000. This means that while direct labor makes up only 5% of our total product cost, it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won't be surprised if next year the rate is $4,000 per direct labor hour. I'm also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30~minute error in our estimate of assembly time is worth $ 1,500. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. What did the engineer mean about the large overhead rate being a disadvantage when plating bids and seeking new business?
(Appendix 4A) Journal Entries, Job Costs The following transactions occurred during the month of April for Nelson Company: a. Purchased materials costing 4,610 on account. b. Requisitioned materials totaling 4,800 for use in production, 3,170 for Job 518 and the remainder for Job 519. c. Recorded 65 hours of direct labor on Job 518 and 90 hours on Job 519 for the month. Direct laborers are paid at the rate of 14 per hour. d. Applied overhead using a plantwide rate of 6.20 per direct labor hour. e. Incurred and paid in cash actual overhead for the month of 973. f. Completed and transferred Job 518 to Finished Goods. g. Sold on account Job 517, which had been completed and transferred to Finished Goods in March, for cost (2,770) plus 25%. Required: 1. Prepare journal entries for Transactions a through e. 2. Prepare job-order cost sheets for Jobs 518 and 519. Prepare journal entries for Transactions f and g. (Note: Round to the nearest dollar.) 3. Prepare a schedule of cost of goods manufactured for April. Assume that the beginning balance in the raw materials account was 1,025 and that the beginning balance in the work-in-process account was zero.
(Appendix 4A) Overhead Application, Journal Entries, Job Cost At the beginning of the year, Smith Company budgeted overhead of 129,600 as well as 13,500 direct labor hours. During the year, Job K456 was completed with the following information: direct materials cost, 2,750; direct labor cost, 5,355. The average wage for Smith Company employees is 17 per hour. By the end of the year, 18,100 direct labor hours had actually been worked, and Smith incurred the following actual overhead costs for the year: Required: 1. Calculate the overhead rate for the year. 2. Calculate the total cost of Job K456. 3. Prepare the journal entries to record actual overhead and to apply overhead to production for the year. 4. Is overhead overapplied or underapplied? By how much? 5. Assuming that the normal cost of goods sold for the year is 635,600, what is the adjusted cost of goods sold?