Concept explainers
Preparing
Learning Objective 5
Blue Ridge Mountain Manufacturing had the following transactions related to manufacturing overhead for the year:
1. Incurred
a. $5,000 in indirect materials
b. $12,500 in indirect labor (credit Wages Payable)
c. $30,600 in machinery
d. $20,400 in other indirect costs that were paid in cash
2. Allocated manufacturing overhead (use a compound entry)
a. $30,000 to the Mixing Department
b. $37,000 to the Packaging Department
Requirements
1. Prepare the journal entries for Blue Ridge Mountain Manufacturing.
2. Determine the amount of overallocated or underallocated manufacturing overhead by posting the transactions to the Manufacturing Overhead account. Assume the balance in Manufacturing Overhead on January 1 is $0. Prepare the
Want to see the full answer?
Check out a sample textbook solutionChapter 20 Solutions
MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Accounting
- Calculate a job cost using ABC (Learning Objective 2)Oliver Industries, a small, family-run manufacturer, has adopted an ABC system . The fol- lowing manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year :54-7Direct materials ................................................................................ ? Direct labor ...................................................................................... ? Manufacturing overhead ...... .......... .......... ............. ................. .......... ? Total job cost .................................................................................... $?Classifying costs within the cost hierarchy (Learning Objective 2) Classify each of the following costs as either unit-level, batch-level, product-level, orfacility-level.a. Engineering costs for new productb. Order processingc. Depreciation on factoryd. Direct labore. Shipment of an order to a customerf. Product line manager…arrow_forwardThe cutting department of Legacy Production Company started 40,000 units of specialized chairs during the month of March. The department incurred $15,000 in direct material costs; 2,500 direct labor hours paid at $10 per hour; and manufacturing overhead applied at 150% of direct labor cost. Legacy Production Company uses process costing to accumulate costs. NOTE: There was no beginning inventory in March. Required (Excel Template downloadProvided): (Module Learning Outcomes LO5.1 through LO5.5 AND Course Learning Outcome #1 & #2) Calculate the conversion costs incurred during the month of March (show your calculations). Assume, that only 30,000 units were completed and transferred out. The remaining units left in ending inventroy are only 70% complete with respect to conversion costs. Direct materials are added at the beginning of the process. Prepare a Cutting Department cost production report for the month of March Refer to the cost production report in part b. What are…arrow_forwardCompute departmental overhead rates (Learning Objective 1)54-4Snyder Snacks makes potato chips, corn chips, and cheese puffs using three different pro- duction lines within the same manufacturing plant . Currently, Snyder uses a single plant- wide overhead rate to allocate its $3,311,500 of annual manufacturing overhead . Of this amount, $2,070,000 is associated with the potato chip line, $763,000 is associated with the corn chip line, and $478,500 is associated with the cheese puff line. Snyder's plant is currently running a total of 17,900 machine hours: 11,500 in the potato chip line, 3,500 in the corn chip line, and 2,900 in the cheese puff line. Snyder considers machine hours to be the cost driver of manufacturing overhead costs .1. What is Snyder's plantwide overhead rate?2. Calculate the departmental overhead rates for Snyder's three production lines. Roundall answers to the nearest cent .3. Which products have been overcosted by the plantwide rate? Which products havebeen…arrow_forward
- Recording materials transactions Prepare a journal entry to record each of the following materials transactions: a. Total materials purchased on account during the month amounted to 200,000. b. Direct materials requisitioned for the month totaled 175,000. c. Indirect materials requisitioned during the month totaled 12,000. d. Direct materials returned to the storeroom from the factory amounted to 2,500. e. Total materials returned to vendor during the month amounted to 1,800. f. Payment during the month for materials purchased on account totaled 165,000.arrow_forwardUse ABC to allocate manufacturing overhead (Learning Objective 2)Several years after reengineering its production process, King Corporation hired a new controller, Christine Erickson . She developed an ABC system very similar to the one used by King's chief rival. Part of the reason Erickson developed the ABC system was because King's profits had been declining, even though the company had shifted its product mix toward the product that had appeared most profitable under the old system . Before adopting the new ABC system, the company had used a plantwide overhead rate, based on direct labor hours developed years ago .For the upcoming year, King's budgeted ABC manufacturing overhead allocation rates are as follows :ActivityMaterials handling .......................... Machine setup ................................ Insertion of parts ............................ Finishing .........................................Allocation BaseNumber of partsNumber of setupsNumber of partsFinishing…arrow_forwardPreparing comprehensive accounting for manufacturing transactions Mighty Stars produces stars for elementary teachers to reward their students Mighty Stars’ trial balance on June 1 follows: June 1 balances in the subsidiary ledgers were as follows: • Raw Materials Inventory subsidiary ledger: Paper, $4,000; indirect materials, $2,000 • Work-in-Process Inventory subsidiary ledger: Job 120, $40,000; Job 121, $0 June transactions are summarized as follows: a. Collections on account, $145,000. b. Selling and administrative expenses incurred and paid, $32,000. c. Payments on account, $39,000. d. Materials purchases on account: Paper, $24,000; indirect materials, $4,200. e. Materials requisitioned and used in production: f. Wages incurred during June, $39,000. Labor time records for the month: Job 120, $3,600; Job 121, $17,000; indirect labor, $18,400. g. Wages paid in June include the balance in Wages Payable at May 31 plus $36,100 of wages incurred during June. h. Depreciation on plant and…arrow_forward
- eBook Show Me How Question Content Area Financial Statements of a Manufacturing Firm The following events took place for Technology Treasures Manufacturing Company during January, the first month of its operations as a producer of digital video monitors: Purchased $142,900 of materials. Used $126,600 of direct materials in production. Incurred $305,300 of direct labor wages. Incurred $101,800 of factory overhead. Transferred $508,800 of work in process to finished goods. Sold goods for $742,000. Sold goods with a cost of $445,200. Incurred $106,000 of selling expense. Incurred $67,800 of administrative expense. Using the information given, complete the following: Question Content Area a. Prepare the January income statement for Technology Treasures Manufacturing Company. Technology Treasures Manufacturing CompanyIncome StatementFor the Month Ended January 31 $- Select - - Select - $- Select - Operating expenses: $- Select -…arrow_forwardClick to watch the Tell Me More Learning Objective 3 video and then answer the questions below. 1. The journal entry to recognize depreciation on machinery is ________. a debit to Factory Overhead and a credit to Accumulated Depreciation a debit to Accumulated Depreciation and a credit to Factory Overhead a debit to Factory Overhead and a credit to Depreciation Expense a debit to Depreciation Expense and a credit to Factory Overhead 2. Process and job order cost systems are similar in ________ manner. recording and summarizing product costs classifying product costs as direct materials, direct labor, and factory overhead allocating factory overhead costs to products All of these choices are correct.arrow_forwardPreparing journal entries—manufacturing overhead Blue Ridge Mountain Manufacturing had the following transactions related to manufacturing overhead for the year: Incurred manufacturing overhead costs $5,000 in indirect materials $12,500 in indirect labor (credit Wages Payable) $30,600 in machinery depreciation $20,400 in other indirect costs that were paid in cash 2. Allocated manufacturing overhead (use a compound entry) $30,000 to the Mixing Department $37,000 to the Packaging Department Requirements Prepare the journal entries for Blue Ridge Mountain Manufacturing. Determine the amount of overallocated or underallocated manufacturing overhead by posting the transactions to the Manufacturing Overhead account. Assume the balance in Manufacturing Overhead on January 1 is $0. Prepare the adjusting entry.arrow_forward
- Subject: Cost management & accounting QUESTION – 9**Following transactions were recorded in the books of Wahid Electronics Est., for the month of April 1989.Beginning Inventories: Rs. Ending Inventories: RsMaterials 19,000 Materials 8,900Work – In – Process 7,500 Work – In – Process 15,700Finished Goods 26,000 Finished Goods 21,750Transactions for the months were:Material Purchased 275,000 Consumable & supplies (Indir. Mat.) 54,000Utilites 60,000 Wages 90,000 (Factory 60%, Office 40%) (Factory 70%, Office 30%) Salaries – Office Staff 30,000 Salaries – Sales Staff 10,000Travelling Expenses – Sales 25,500 Factory Overheads…arrow_forwardClick to watch the Tell Me More Learning Objective 4 video and then answer the questions below. 1. Which of the following represents the computation of direct materials cost per equivalent unit? Total direct cost for the period divided by total equivalent units of direct materials. Total equivalent units of direct materials divided by total direct cost for the period. Total direct cost for the period divided by total units of direct materials. Total units of direct materials divided by total direct cost for the period. 2. What is the conversion cost per equivalent unit, when the total conversion cost for the period is $1,225 and the total units of packaged drinking water produced during the same period is 5,000 gallons (70 percent complete). $0.17 per gallon $0.35 per gallon $2.86 per gallon None of these choices are correct.arrow_forwardPreparing journal entries—inputs Oxford Company had the following transactions in October: Purchased raw materials on account, $70,000 Used materials in production: $26,000 in the Mixing Department; $14,000 in the Packaging Department; $1,000 in indirect materials Incurred labor costs: $8,000 in the Mixing Department; $7,200 in the Packaging Department; $2,200 in indirect labor. Incurred manufacturing overhead costs: 153,500 in machinery depreciation; paid $2,300 for rent and $1,590 for utilities Prepare the journal entries for Oxford Company.arrow_forward
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning