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 machine hours would be worked and $5,024,000 overhead cost would be incurred during 202o. company estimated that 31,400 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.

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 machine hours would be worked and $5,024,000 overhead cost would be incurred during 202o. company estimated that 31,400 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.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

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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PREDETERMINED FACTORY OVERHEAD RATE Millerlile Enterprises calculates a predetermined factory overhead rate so that factory overhead may be applied to production during the month. It calculates the overhead using three different methods and then decides which one to use. Total estimated factory overhead costs are 540,000. Total estimated direct labor hours are 50,000. Total estimated direct labor costs are 900,000. Total machine hours are estimated to be 80,000. Calculate the predetermined overhead application rates based on (1) direct labor hours, (2) direct labor costs, and (3) machine hours.
JOB ORDER COSTING TRANSACTIONS D K Enterprises makes wicker baskets. During the month of August, the company had four job orders: 501, 502, 503, and 504. Overhead was applied at predetermined rates, while actual factory overhead was recorded as incurred. All four jobs were completed. (a) Purchased raw materials on account, 44,000. (b) Issued direct materials to production: (c) Issued indirect materials to production, 5,000. (d) Incurred direct labor costs: (e) Charged indirect labor to production, 3,300. (f) Paid electricity, heating oil, and repair bills for the factory and charged to production, 5,200. (g) Applied factory overhead to each of the jobs using a predetermined factory overhead rate as follows: (h) Finished Job Nos. 501-504 and transferred to the finished goods inventory account as products W, X, Y, and Z, respectively. (i) Sold products W, X, Y, and Z for 17,500, 18,000, 16,900, and 19,000, respectively. REQUIRED 1. Prepare general journal entries to record transactions (a) through (i). Make compound entries for (b), (d), and (g), with separate debits for each job. 2. Post the entries to the work in process and finished goods T accounts only.
PREDETERMINED FACTORY OVERHEAD RATE Marston Enterprises calculates a predetermined factory overhead rate so that factory overhead may be applied to production during the month. It calculates the overhead using three different methods and then decides which one to use. Total estimated factory overhead costs are 600,000. Total estimated direct labor hours are 30,000. Total estimated direct labor costs are 1,200,000. Total machine hours are estimated to be 200,000. Calculate the predetermined overhead application rates based on (1) direct labor hours, (2) direct labor costs, and (3) machine hours.
Overhead Assignment: Actual and Normal Activity Compared Reynolds Printing Company specializes in wedding announcements. Reynolds uses an actual job-order costing system. An actual overhead rate is calculated at the end of each month using actual direct labor hours and overhead for the month. Once the actual cost of a job is determined, the customer is billed at actual cost plus 50%. During April, Mrs. Lucky, a good friend of owner Jane Reynolds, ordered three sets of wedding announcements to be delivered May 10, June 10, and July 10, respectively. Reynolds scheduled production for each order on May 7, June 7, and July 7, respectively. The orders were assigned job numbers 115, 116, and 117, respectively. Reynolds assured Mrs. Lucky that she would attend each of her daughters weddings. Out of sympathy and friendship, she also offered a lower price. Instead of cost plus 50%, she gave her a special price of cost plus 25%. Additionally, she agreed to wait until the final wedding to bill for the three jobs. On August 15, Reynolds asked her accountant to bring her the completed job-order cost sheets for Jobs 115, 116, and 117. She also gave instructions to lower the price as had been agreed upon. The cost sheets revealed the following information: Reynolds could not understand why the overhead costs assigned to Jobs 116 and 117 were so much higher than those for Job 115. She asked for an overhead cost summary sheet for the months of May, June, and July, which showed that actual overhead costs were 20,000 each month. She also discovered that direct labor hours worked on all jobs were 500 hours in May and 250 hours each in June and July. Required: 1. How do you think Mrs. Lucky will feel when she receives the bill for the three sets of wedding announcements? 2. Explain how the overhead costs were assigned to each job. 3. Assume that Reynoldss average activity is 500 hours per month and that the company usually experiences overhead costs of 240,000 each year. Can you recommend a better way to assign overhead costs to jobs? Recompute the cost of each job and its price, given your method of overhead cost assignment. Which method do you think is best? Why?
When setting its predetermined overhead application rate. Tasty Turtle estimated its overhead would be $75,000 and manufacturing would require 25,000 machine hours in the next year. At the end of the year, it found that actual overhead was $74,000 and manufacturing required 24,000 machine hours. Determine the predetermined overhead rate. What is the overhead applied during the year? Prepare the journal entry to eliminate the under- or over applied overhead.
Job costs At the end of May, Bergan Company had completed Jobs 200 and 305. Job 200 is for 2,390 units, and Job 305 is for 2,053 units. Using the data from BE 16-1, BE 16-2, and BE 16-4, determine (A) the balance on the job cost sheets for Jobs 200 and 305 at the end of May, and (B) the cost per unit for Jobs 200 and 305 at the end of May.
Entries and schedules for unfinished jobs and completed jobs Hildreth Company uses a job order cost system. The following data summarize the operations related to production for April, the first month of operations: A. Materials purchased on account, 147,000. B. Materials requisitioned and factory labor used: C. Factory overhead costs incurred on account, 6,000. D. Depreciation of machinery and equipment, 4,100. E. The factory overhead rate is 40 per machine hour. Machine hours used: F. Jobs completed: 101, 102, 103, and 105. G. Jobs were shipped and customers were billed as follows: Job 101, 62,900; Job 102, 80,700; Job 105, 45,500. Instructions 1. Journalize the entries to record the summarized operations. 2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month. 3. Prepare a schedule of unfinished jobs to support the balance in the work in process account. 4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.
Entries and schedules for unfinished jobs and completed jobs Kurtz Fencing Inc. uses a job order cost system. The following data summarize the operations related to production for March, the first month of operations: A. Materials purchased on account, 45,000. B. Materials requisitioned and factory labor used: C. Factory overhead costs incurred on account, 1,800. D. Depreciation of machinery and equipment, 2,500. E. The factory overhead rate is 30 per machine hour. Machine hours used: F. Jobs completed: 301, 302, 303, and 305. G. Jobs were shipped and customers were billed as follows: Job 301, 8,500; Job 302, 16,150; Job 303, 13,400. Instructions 1. Journalize the entries to record the summarized operations. 2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month. 3. Prepare a schedule of unfinished jobs to support the balance in the work in process account. 4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.
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.
JOB ORDER COSTING WITH UNDER- AND OVERAPPLIED FACTORY OVERHEAD M. Evans Sons manufactures parts for radios. For each job order, it maintains ledger sheets on which it records direct labor, direct materials, and factory overhead applied. The factory overhead control account contains postings of actual overhead costs. At the end of the month, the under- or over applied factory overhead is charged to the cost of goods sold account. Factory overhead is applied on the basis of direct labor hours. For Job Nos. 101, 102,103, and 104, direct labor hours are 12, 000, 10,000, 11, 000, and 18,000, respectively. The overhead application rate is 1.20/direct labor hour. (a) Purchased raw materials on account, 50,000. (b) Issued direct materials: (c) Issued indirect materials to production, 8,000. (d) Incurred direct labor costs: (e) Charged indirect labor to production, 15,000. (f) Paid electricity bill, taxes, and repair fees for the factory and charged to production, 8,000. (g) Depreciation expense on factory equipment, 30,000. (h) Applied factory overhead to Job Nos. 101104 using the predetermined factory overhead rate (see above). (i) Finished Job Nos. 101103 and transferred to the finished goods inventory account as products N, O, and P. (j) Sold products N and for 50,000 and 45,400, respectively. (k) Transferred under- or over applied factory overhead balance to the cost of goods sold account. REQUIRED 1. Prepare general journal entries to record transactions (a) through (k). 2. Post the entries to the work in process and finished goods accounts only and determine the ending balances in these accounts. 3. Compute the balance in the job cost ledger and verify that this balance agrees with that in the work in process control account.
(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.
JOB ORDER COSTING TRANSACTIONS Stonestreet Enterprises makes garage doors. During the month of February, the company had four job orders: 205, 206, 207, and 208. Overhead was applied at predetermined rates, while actual factory overhead was recorded as incurred. All four jobs were completed. (a) Purchased raw materials on account, 44,000. (b) Issued direct materials to production: (c) Issued indirect materials to production, 5,700. (d) Incurred direct labor costs: (e) Charged indirect labor to production, 3,400. (f) Paid electricity, heating oil, and repair bills for the factory and charged to production, 5,300. (g) Applied factory overhead to each of the jobs using a predetermined factory over-head rate as follows: (h) Finished Job Nos. 205-208 and transferred to the finished goods inventory account as products L, M, N, and O, respectively. (i) Sold products L, M, N, and O, on account, for 21,000, 20,300, 19,000, and 20,500, respectively. REQUIRED 1. Prepare general journal entries to record transactions (a) through (i). Make compound entries for (b), (d), and (g), with separate debits for each job. 2. Post the entries to the work in process and finished goods T accounts only.