Question

Please show all work!

You have just been hired by a start-up company that makes two different electronic components (one intended for DVDs and the other for cell phones) with the flow of work proceeding through two different departments: machining and assembly. During the month, three jobs were placed in production (Jobs #1 and #2 are completed; Job #3 is in Assembly) and there was no beginning work-in-process inventory. The owner is looking for your help with product costing and developing an income statement to be shared with the local bank in order to secure additional financing. A preliminary factory budget had been prepared and was shared:

Total budgeted overhead for the year is $240,000

Overhead is applied on the basis of direct labor dollars.

Total budgeted direct labor dollars for the year are $300,000.

Based upon the owner’s expectations, you know you will need to:

Determine the budgeted overhead application rate for the year.

Maintain the Job Order Cards for Jobs #1, #2, and #3.

Record all costs through the accounting system in proper journal entry form

Determine the unit cost for

Job #1—110,000 units of output (DVD component)

Job #2—163,120 units of output (cell phone component)

Determine the markup on cost if the DVD components in Job #1 sold for $.70 each and the cell phone part (Job #2) sold for $.80 each.

Ascertain the gross margin percentage for the DVD and the cell phone component.

The company sells 50,000 units of Job #1 and 40,000 units of Job #2. Prepare the journal entry(s) to record the sale. Construct an income statement for the month identifying gross profit and pretax profit (ignore income taxes).

Determine the amounts in Finished Goods, Work-in-Process, and Raw Materials Inventory at the end of the month?

At month’s end is the overhead control account over or under applied and by what amount? What would be the journal entry to close out this account if it were year end?

The owner apologizes but gives you a box filled with slips of paper reflecting the month’s activities and hopes you can make sense of it all. Certain shared costs (janitors and cleaning supplies, gas and electric, casualty insurance and property taxes) need to be allocated as the factory shares space with the administrative offices (80% of the space is factory related and 20% for the office staff):

Raw materials purchased on credit                                 $200,000

Gas and Electric                                                                  1,000

Depreciation on factory machines                                      10,000

Depreciation on office fixtures                                            2,000

Janitorial salaries                                                                 1300

Material requisition slip-machining Job #1                         10,000

Material requisition slip-assembly Job #1                                   25,000

Material requisition slip-machining Job #2                                 15,000

Material requisition slip-assembly Job #2                                    50,000

Material requisition slip-machining Job #3                                  12,000

Material requisition slip-assembly Job #3                                    75,000

Material requisition slip-Machining (machine lubricant)                     50

Material requisition slip-Assembly (gloves)                                       75

Time ticket-Machining Job #1                                                   4,000

Time ticket-Assembly Job #1                                                    1,000

Time ticket-Machining Job #2                                                   7,000

Time ticket-Assembly Job #2                                                    2,200

Time ticket-Machining Job #3                                                   8,500

Factory machine repairs                                                            10,000

Salesman’s salary                                                                      4,000

Advertising Expense                                                                 5,000

Monthly property taxes                                                             2,000

Factory foreman’s salary                                                           5,000

Monthly casualty insurance                                                           700

                                                                                                                            

Job #1

	Machining	Assemblying	Total
Direct Materials
Direct Labor
Overhead
Total

Job #2

	Machining	Assemblying	Total
Direct Materials
Direct Labor
Overhead
Total

Job #3

	Machining	Assemblying	Total
Direct Materials
Direct Labor
Overhead
Total

Answer 1

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