Problem 1:
The manufacturing operations of Beatly, Inc. had the following balances for the month of January:
January 1 January 31
Raw materials $12,000 $13,000
Work in process 21,000 23,000
Finished goods 14,000 12,000
Beatly transferred $270,000 of completed goods out of work in process during January.
Instructions
Compute the cost of goods sold for January.
Problem 2:
Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual inventory records. Prepare journal entries to record the following transactions during the month of June.
June 1 Purchased raw materials for $20,000 on account.
8 Raw materials requisitioned by production:
Direct materials $8,000
Indirect materials 1,000
15 Paid factory utilities, $2,100 and repairs for factory equipment, $8,000.
25 Incurred $108,000 of factory labor.
25 Time tickets indicated the following:
Direct Labor (7,000 hrs × $12 per hr) = $84,000
Indirect Labor (3,000 hrs × $8 per hr) = 24,000
$108,000
25 Applied manufacturing overhead to production based on a predetermined overhead rate of $7 per direct labor hour worked.
28 Goods costing $18,000 were completed in the factory and were transferred to finished goods.
30 Goods costing $15,000 were sold for $20,000 on account.
Problem 3:
Fort Corporation had the following transactions during its first month of operations:
1. Purchased raw materials on account, $85,000.
2. Raw Materials of $30,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,000 was classified as indirect materials.
3. Factory labor costs incurred were $175,000 of which $145,000 pertained to factory wages payable and $30,000 pertained to employer payroll taxes payable.
4. Time tickets indicated that $145,000 was direct labor and $30,000 was indirect labor.
5. Overhead costs incurred on account were $198,000.
6. Manufacturing overhead was applied at the rate of 150% of direct labor cost.
7. Goods costing $115,000 are still incomplete at the end of the month; the other goods were completed and transferred to finished goods.
8. Finished goods costing $100,000 to manufacture were sold on account for $130,000.
Instructions
Journalize the above transactions for Fort Corporation.
Problem 4:
Builder Bug Company allocates manufacturing overhead at $9 per direct labor hour. Job A45 required 4 boxes of direct materials at a cost of $30 per box and took employees 14 hours to complete. Employees earn $15 per hour.
Instructions
Compute the total cost of Job A45.
Problem 5:
Fancy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.
Budgeted overhead $880,000
Actual overhead $910,000
Budgeted decorator hours 40,000
Actual decorator hours 41,000
The company uses Operating Overhead in place of Manufacturing Overhead.
Instructions
(a) Compute the predetermined overhead rate.
(b) Prepare the entry to apply the overhead for the year.
(c) Determine whether the overhead was under - or overapplied and by how much.