Music Company manufactures musical instruments. The company uses a normal costing system, in which manufacturing overhead is applied on the basis of direct-labor hours. The company's budget for the current year included the following:
Budgeted Total Manufacturing overhead $420,000
Budgeted Total Direct Labor hours 20,000
Selected accounts for June 1 are as follows:
Raw materials inventory $14,000
Manufacturing Supplies Inventory 600
Work in process inventory(Job A which is made up of incomplete cornets) 8,000
Finished goods inventory(Jobs B, C, and D which are made up of Finished Tubas) 22,000
During June, the firm started work on the following 2 jobs and did not do anymore work on Job A for June.
Job number 1, consisting of 74 saxophones
Job number 2, consisting of 113 trumpets
Below is what transpired in the month of June
1. Purchased on account $6,200 of rolled brass sheet metal, which totaled 1,000 square feet of rolled brass sheet metal.
2. Purchased on account $5,400 of brass tubing, which totaled 400 pounds of brass tubing.
3. The following requisitions were submitted during the month:
Material requisition number 14: 270 square feet of brass sheet metal of $5.50 per square foot requisitioned for Job 1
Material requisition number 15: 1,050 pounds of brass tubing, at $9 per pound requisitioned for job 2
Material requisition number 16: 11 gallons of valve lubricant, at $12 per gallon requisitioned for general factory use
4. Labor time sheets for June:
Direct labor for Job 1: 840 hours $21 per hour
Direct labor for Job 2: 940 hours $21 per hour
Indirect labor: $4,500 for General factory cleanup
Indirect Labor: $9,000 Factory supervisor salaries
5. Depreciation of the factory building and equipment during June amounted to $14,000.
6. Rent paid in cash for warehouse space used for production during June was $1,400.
7. Utility costs incurred during June amounted to $2,600.
8. Property tax paid on factory, $2,4500. factory $2,450
9. The insurance cost covering factory operations for the month was $2,9500, was $2,950.
10. The costs of salaries and fringe benefits for sales and administrative personnel paid in cash during June amounted to $3,600.
11. Depreciation on administrative office equipment and space amounted to $4,600.
12. Other selling and administrative expenses paid in cash during June amounted to $160.
13. Job 1 was completed during the month.
14. Half of the saxophones from Job 1 were sold on account during the month for $762 per Saxophone.
Required:
a. Calculate the company's predetermined overhead rate for the year:
b. Complete the job cost sheet for the two jobs worked on in June:
c. Compute the actual manufacturing overhead for June.
d. What is amount of over or underapplied overhead for June? Is it over or underapplied?
e. What is the ending raw materials inventory for June?
f. What is ending work in process inventory for June?
g. What is ending finished goods inventory for June?
h. Prepare a cost of goods manufactured statement for the month like the one in exhibit 3-8 page 100.
i. Prepare a cost of goods sold statement for the month like the one in exhibit 3-9 page 101.
j. Prepare an income statement for the month assuming a tax rate of 25% like the one in exhibit 3-10 page 101.