P20-1A Bynum Manufacturing uses a job order cost system and
applies overhead to production on the basis of direct labor costs. On January
1, 2012, Job No. 50 was the only job in process. The costs incurred prior to
January 1 on this job were as follows: direct materials $20,000, direct labor
$12,000, and manufacturing overhead $16,000. As of January 1, Job No. 49 had
been completed at a cost of $90,000 and was part of finished goods inventory.
There was a $15,000 balance in the Raw Materials Inventory account.
During the month of January, Bynum Manufacturing began
production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were
also sold on account during the month for $222,000 and 158,000, respectively.
The following additional events occurred during the month.
1. Purchased
additional raw materials of $90,000 on account.
2. Incurred
factory labor costs of $65,000. Of this amount, $16,000 related to employer
payroll taxes.
3. Incurred
manufacturing overhead costs as follows: indirect materials $17,000; indirect
labor $15,000; depreciation expense on equipment $19,000; and various other
manufacturing overhead costs on account $20,000.
4. Assigned
direct materials and direct labor to jobs as follows.
Job No. Direct Materials Direct
Labor
50 $10,000 $5,000
51 39,000 25,000
52 30,000 20,000
Instructions
a) Calculate
the predetermined overhead rate of 2012, assuming Bynum Manufacturing estimates
total manufacturing overhead costs of $1,050,000, direct labor costs of
$700,000, and direct labor hours of 20,000 for the year.
b) Open
job cost sheets for Jobs 50,51, and 52. Enter the January 1 balances on the job
cost sheet for Job No.50.
c) Prepare
the journal entries to record the purchase of raw materials, the factory labor
costs incurred, and the manufacturing overhead costs incurred during the month
of January.
d) Prepare
the journal entries to record the assignment of direct materials, direct labor,
and manufacturing overhead costs to production. In assigning manufacturing
overhead costs, use the overhead rate calculated in (a). Post all costs to the
job cost sheets as necessary.
e) Total
the job cost sheets for any job(s) completed during the month. Prepare the
journal entry (or entries) to record the
completion of any job(s) during the month.
f) Prepare
the journal entry (or entries) to record the sale of any job(s) during the
month.
g) What
is the balance in the Finishes Goods Inventory account at the end of the month?
What does this balance consist of?
h) What
is the amount of over- or underapplied overhead?
P21-6A) Martine Processing company
uses a weighted-average process costing system and manufactures a single
product – a premium rug shampoo and cleaner. The manufacturing activity for the
month of October has just been completed. A partially completed production cost
report for the month of October for the mixing and cooking department is shown
below.
Instructions
(a)
Prepare a schedule that shows how the
equivalent units were computed so that you can complete the “Quantities: Units
accounted for” equivalent units section shown in the production cost report,
and compute October unit costs.
(b)
Complete the “Cost Reconciliation
Schedule” part of the production cost report below.
BE20-5 Data pertaining to job cost
sheets for Alomar Tool & Die are given in BE20-3 and BE20-4. Prepare the
job cost sheets for each of the three jobs. (Note: You may omit the column for
Manufacturing Overhead.)
BE20-6 Formu Company estimates that
annual manufacturing overhead costs will be $800,000. Estimated annual
operating activity bases are: direct labor cost $500,000, direct labor hours
50,000, and machine hours 100,000. Compute the predetermined overhead rate for
each activity base.
BE20-7 During the first quarter, McKay
Company incurs the following direct labor costs: January $40,000, February
$30,000, and March $50,000. For each month, prepare the entry to assign
overhead to production using a predetermined rate of 90% of direct labor cost.
