Question - Widmer Watercraft's predetermined overhead rate for year 2015 is 200% of direct labor. Information on the company's production activities during May 2015 follows.
a. Purchased raw materials on credit, $220,000.
b. Materials requisitions record use of the following materials for the month. Job 136 $ 48,500 Job 137 32,000 Job 138 19,600 Job 139 23,000 Job 140 6,400 Total direct materials 129,500 Indirect materials 21,500 Total materials used $ 151,000
c. Paid $15,000 cash to a computer consultant to reprogram factory equipment.
d. Time tickets record use of the following labor for the month. These wages were paid in cash. Job 136 $ 12,100 Job 137 10,600 Job 138 38,100 Job 139 39,600 Job 140 3,600 Total direct labor 104,000 Indirect labor 24,500 Total $ 128,500
e. Applied overhead to Jobs 136, 138, and 139.
f. Transferred Jobs 136, 138, and 139 to Finished Goods.
g. Sold Jobs 136 and 138 on credit at a total price of $530,000.
h. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). Depreciation of factory building $ 69,500 Depreciation of factory equipment 38,000 Expired factory insurance 12,000 Accrued property taxes payable 35,500
i. Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
Required:
1. Prepare a job cost sheet for each job worked on during the month.
2. Prepare journal entries to record the events and transactions a through i.
3. Prepare T-accounts for each of the following general ledger accounts, each of which started the month with a zero balance: Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Factory Payroll, Factory Overhead, Cost of Goods Sold. Post the journal entries from Part 2 to the following T-accounts
4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Work in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.