Question

Super Speed Motor Co. assembles motors of sport cars. It jobs costing system has two direct cost categories (direct materials and direct labors) and one indirect cost pool (manufacturing overhead allocated at a budgeted rate per machine hour.)   The budgeted manufacturing overhead was $800,000 and the budgeted machine hours 200,000. The following data (in thousands) pertain to January 2020:

1. Direct materials and supplies purchased on account …………………………………    22

       

2. Direct materials used …………………………………………………………………    19

       

3. Indirect materials issued to various production departments …………………… …        2

       

4. Direct manufacturing labor paid…….……………………………………………….      20

       

5. Indirect manufacturing labor incurred by various departments ……………………..        8

       

6. Manufacturing overhead was incurred as follows:

             

           Depreciation ………………………………………………………………………..     2

            

            Expired insurance ………………………………………………………………….      1

           

            Miscellaneous manufacturing overhead ……………………………………….…..     4

              

7. Completed jobs and transferred to the warehouse…………………………………..       54

8. Credit sales …………………………………………………………………………        63

      

1. Cost of goods sold ………………………………………………………………….       50

10. Used machine hours during January………….……………………………………      4 hours

Required:

1. Prepare general journal entries to summarize January transactions.
2. As your final entry, dispose of the month end over or under allocated manufacturing overhead as a direct write off to Cost of Goods Sold.

Answer 1

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