Question

You work for Thunderduck Custom Tables Inc. This is the first month of operations. The company designs and manufactures specialty tables. Each table is specially customized for the customer. This month, you have been asked to develop and manufacture two new tables for customers. You will design and build the tables. This is a no nail, no screw, and no glue manufacturing ( no indirect materials used). You will be keeping track of the costs incurred to manufacture the tables using Job #1 Cost Sheet and Job #2 Cost Sheet. The cost of the direct materials that can be used to manufacture the table are as follows. These cost are on a per unit basis. Table Top $2,500.00 Table Leg $900.00 Drawer $450.00 The company uses a job order costing system and applies manufacturing overhead to jobs based on direct labor hours. The company estimates that there will be 12 direct labor hours worked during the month. The estimated manufacturing overhead cost for the month is: a. Factory supervisor salary per month $2,500.00 b. Rent for the factory per month $1,100.00 c. Depreciation of factory equipment per month $600.00 Total Estimated manufacturing overhead $4,200.00 What is the predetermined manufacturing overhead rate? 350 Step 2 The first order you received was to manufacture a table using a table top and four legs. This is your Job #1. Step 3 The customer that has ordered Job #2, wants a table that is the same as Job #1, but wants to also add a drawer to the table. Step 4 The following is a list of transactions that need to be recorded for the company for activity in the month of December. Record those in the "General Journal" tab of the excel file using the proper format. Please use the following accounts: Accounts Receivables, Raw materials, Work in process, Finished goods, Accumulated depreciation, Accounts payable, Salaries and wages payable, Sales revenue, Manufacturing overhead, Cost of goods sold, Salaries and wages expense, Advertising expenses, and Depreciation expense. 1-Dec Raw Materials purchased on account, $25,000. 5-Dec All Raw Materials needed for Job #1 were requisitioned from the material storage for use during the month. Assume all materials are direct. (After you journalize this entry please enter the information into Job #1 Cost Sheet) 10-Dec The following employee costs were incurred but not paid during the month: There are three assembly employees that spend 2 hours each, $35 per hour to make the table for Job #1. (After you journalize this entry please enter the information into Job #1 Cost Sheet) Salary for supervisor of the factory $3,000. Administrative Salary $2,000. 15-Dec All Raw Materials needed for Job #2 were requisitioned from the material storage for use during the month. Assume all materials are direct. (After you journalize this entry please enter the information into Job #2 Cost Sheet) 16-Dec Rent for the month of December for the factory building incurred but not paid $1,100. 17-Dec Advertising costs incurred but not paid for the month was $1,200. 20-Dec Depreciation for the month of December was recorded on equipment was $750 ($150 for equipment used in the factory and the remainder for equipment used in selling and administrative activities). 22-Dec Manufacturing overhead cost was applied based on direct labor hours to Job #1 based on the POHR determined on the "Job Cost Sheet". (After you journalize this entry please enter the information into Job #1 Cost Sheet) 26-Dec Job #1 was completed and transferred to Finished Goods during the month. 28-Dec The completed table from Job #1 was sold on account to the customer for $30,000 during the month. (Hint: Make sure to account for the cost of the table that was sold using the cost from the job cost sheet.) 31-Dec Direct labor cost incurred but not paid for three employees to start manufacturing Job #2. The employees only worked one hour each, three hours total, $35 per hour during the month and they did not complete their work on the job. (After you journalize this entry please enter the information into Job #2 Cost Sheet) 31-Dec Manufacturing overhead cost was applied based on direct labor hours to Job #2 based on the POHR. Only three direct labor hours were worked on Job #2 during the month. (After you journalize this entry please enter the information into Job #2 Cost Sheet) 31-Dec Any underapplied or overapplied overhead for the month was closed out to Cost of Goods Sold. Step 5 Post the journal entries that you recorded on the "General Journal" tab to the "T-accounts" tab. This is the company's first month of business, so there will not be any beginning balances. Compute the balance for each T-account after all of the entries have been posted. Step 6 Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold on the "Schedule of COGM and COGS" tab for Job #1 and Job #2 that were worked on during the month by the company. Make sure to follow the format noted in your book (pg. 87). (Hint: This is the company's first month of operations and therefore the beginning balances will be zero.) Step 7 Prepare an Income Statement for the month using the Traditional Format on the "Income Statement" tab. Step 8 Answer the additional questions below Check Figure: Cost of Goods Manufactured= $8,410, Net operating income=$16,690 What is the ending balance for raw materials? What is the ending balance for work in process? What is the ending balance for finished goods? What is the actual manufacturing overhead cost incurred during December before adjustment? What is the total applied manufacturing overhead cost during December before adjustment? What is the unadjusted cost of goods sold? Was the manufacturing overhead for the month of December overapplied/underapplied ? What is the amount of Manufacturing overhead overapplied/underapplied? What is the adjusted cost of goods sold? What is gross margin? What is the total prime cost for Job#1? What is the total conversion cost for job #1? What is the total product cost for job#1? What was the period cost incurred for the month of December? What is the total variable cost incurred for Job #1(assume that all selling and administrative cost and all manufacturing overhead costs are fixed.)? What is the contribution margin for Job #1 (assume that all selling and administrative cost and all manufacturing overhead costs are fixed.)? What would be the actual (not applied) total fixed manufacturing overhead cost incurred for the company for the month if the order in Job #1 is for five tables instead of one table assuming this cost is with in the relevant range?

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.				Table Top
	Predetermined Overhead Rate	4200/12	$                    350
	Estimated Overhead/Allocation Base
Date	Account	Debit	Credit
Dec 1	Raw Material	$            25,000
Dec 1	Accounts Payable		$               25,000
	(Purchase of Raw Material)
Dec 5	Work in Process Inventory 2500+(900*4)	$               6,100
				Actual
Dec 5	Raw Material Inventory		$                 6,100
	(Requisition of direct and indirect mat)
Dec 10	Work in Process Inventory (3*2*35)	$                  210
Dec 10	Manufacturing Overhead	$               3,000		Actual
Dec 10	Salaries and Wages Expense	$               2,000
Dec 10	Salaries and Wages Payable		$                 5,210
	(being labor cost recorded - direct and indirect)
Dec 15	Work in Process Inventory 2500+(900*4)+450	$               6,550
	Raw Material Inventory		$                 6,550
	(Requisition of direct and indirect mat)
Dec 16	Manufacturing Overhead	$               1,100
	Accounts Payable		$                 1,100
Dec 17	Advertising Expense	$               1,200
	Accounts Payable		$                 1,200
Dec 20	Manufacturing Overhead	$                  150		Actual
Dec 20	Depreciation Expense	$                  600
Dec 20	Accumulated Depreciation		$                    750
	(being ACTUAL overhead recorded)
Dec 22	Work in Process Inventory 350*6	$               2,100
Dec 22	Manufacturing Overhead		$                 2,100	Applied
	(Overhead applied)
	(Predetermined Overhead Rate*Allocation Base)
Dec 26	Finished Goods Inventory	$               8,410		Cost of Goods Manufactured
Dec 26	Work in Process Inventory		$                 8,410
Dec 28	Accounts Receivable	$            30,000
Dec 28	Sale		$               30,000
Dec 28	Cost of goods sold	$               8,410		Cost of Goods Sold
Dec 28	Finished Goods Inventory		$                 8,410
Dec 31	Work in Process Inventory (3*1*35)	$                  105
Dec 31
Dec 31	Salaries and Wages Payable		$                    105
	(being labor cost recorded - direct and indirect)
Dec 31	Work in Process Inventory 350*3	$               1,050
Dec 31	Manufacturing Overhead		$                 1,050	Applied
	(Overhead applied)
	(Predetermined Overhead Rate*Allocation Base)
Dec 31	Cost of Goods Sold	$               1,100
Dec 31	Manufacturing Overhead		$                 1,100

Raw Material
Debit		Credit
Dec 1	$       25,000	Dec 5	$       6,100
		Dec 15	$       6,550
Ending	$       12,350
Work in Process
Debit		Credit
Dec 5	$         6,100	Dec 26	$       8,410
Dec 10	$            210
Dec 15	$         6,550
Dec 22	$         2,100
Dec 31	$            105
Dec 31	$         1,050
Ending	$         7,705
Finished Goods
Debit		Credit
Dec 26	$         8,410	Dec 28	$       8,410
Ending
Manufacturing Overhead
Debit		Credit
Dec 10	$         3,000	Dec 22	$       2,100
Dec 16	$         1,100	Dec 31	$       1,050
Dec 20	$            150	Dec 31	$       1,100
Cost of Goods Sold
Debit		Credit
Dec 28	$         8,410
Dec 31	$         1,100

Job Cost Sheet for Job No 1
	Direct Material	Direct Labor			Manufaturing Overhead
		Hours	Rate	Amount	Hours	Rate	Amount
Date 12/5	$               6,100
Date 12/10		6	$                   35	$       210
Date 12/22					6	$        350	$       2,100
Cost Summary			Units Shipped
Direct Material	$               6,100		Date	No	Balance
Direct Labor	$                  210
Manufacturing Overhead	$               2,100
Total Product Cost	$               8,410
Unit Product Cost	$               8,410
Job Cost Sheet for Job No 2
	Direct Material	Direct Labor			Manufaturing Overhead
		Hours	Rate	Amount	Hours	Rate	Amount
Date 12/15	$               6,550
Date 12/31		3	$                   35	$       105
Date 12/31					3	$        350	$       1,050
Cost Summary			Units Shipped
Direct Material	$               6,550		Date	No	Balance
Direct Labor	$                  105
Manufacturing Overhead	$               1,050
Total Product Cost	$               7,705
Unit Product Cost	$               7,705

Finished goods inventory, beginning			$             -
Work in process inventory, beginning		$               -
Direct materials:
Direct materials inventory, beginning	$               -
Direct materials purchases	$       25,000
Cost of direct materials available for use	$       25,000
Direct materials inventory, ending	$     -12,350
Cost of direct materials placed in production	$       12,650
Direct labor	$            315
Factory overhead Applied	$         3,150
Total manufacturing costs		$       16,115
Total work in process during period		$       16,115
Work in process inventory, ending		$       -7,705
Cost of goods manufactured			$       8,410
Cost of finished goods available for sale			$       8,410
Finished goods inventory, ending			$             -
Cost of goods sold-Unadjusted			$       8,410
Underapplied/(overapplied overhead)			$       1,100
Cost of goods sold-Adjusted			$       9,510
Incme Statement:
Sales Revenue		$       30,000
Less: Cost of Goods Sold:
COGS	$         9,510
		$         9,510
Gross Margin		$       20,490
Less: Selling and Admin:
Salary	$         2,000
Dep	$            600
Advertising	$         1,200	$         3,800
		$       16,690

What is the ending balance for raw materials?	$            12,350
What is the ending balance for work in process?	$               7,705
What is the ending balance for finished goods?	$                     -
What is the actual manufacturing overhead cost incurred during Sepember before adjustment?	$               4,250	3000+1100+150
What is the total applied manufacturing overhead cost during Sepember before adjustment?	$               3,150	2100+1050
What is the unadjusted cost of goods sold?	$               8,410
Was the manufacturing overhead for the month of Sepember overapplied/underapplied ?	Under Applied
What is the amount of Manufacturing overhead overapplied/underapplied?	$               1,100	4250-3150
What is the adjusted cost of goods sold?	$               9,510
What is gross margin?	$            20,490	30000-9510
What is the total prime cost for Job#1?	$               6,310	6100+210	RM+Labor
What is the total conversion cost for job #1?	$               2,310	210+2100	Labor+Overheads
What is the total product cost for job#1?	$               8,410	6100+210+2100	RM+Labor+Overheads
What was the period cost incurred for the month of Sepember?	$               3,800	2000+600+1200	Non Manufacturing
What is the total variable cost incurred for Job #1	$               6,310	6100+210	RM+Labor
What is the contribution margin for Job #1	$            23,690	30000-6310
What would be the actual (not applied)	$               4,200	12*350	Since only 12 hours availabe for the month