Question

In: Accounting

Waterways has two major public-park projects to provide with comprehensive irrigation in one of its service...

Waterways has two major public-park projects to provide with comprehensive irrigation in one of its service locations this month. Job J57 and Job K52 involve 15 acres of landscaped terrain, which will require special-order, sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December.

Raw materials were requisitioned from the company’s inventory on December 2 for $5,019; on December 8 for $1,059; and on December 14 for $3,459. In each instance, two-thirds (2/3) of these materials were for J57 and the rest for K52.

Six time tickets were turned in for these two projects for a total amount of 18 hours of work. All the workers were paid $15.5 per hour. The time tickets were dated December 3, December 9, and December 15. On each of those days, 6 labor hours were spent on these jobs, two-thirds (2/3) for J57 and the rest for K52.

The predetermined overhead rate is based on machine hours. The expected machine hour use for the year is 2,125 hours, and the anticipated overhead costs are $841,500 for the year. The machines were used by workers on projects K52 and J57 on December 3, 9, and 15. Six machine hours were used for project K52 (2 each day), and 8.5 machine hours were used for project J57 (2.5 the first day and 3 each of the other days). Both of these special orders were completed on December 15, producing 200 sprinkler heads for J57 and 100 sprinkler heads for K52.

Additional job order activities during this period included:
Dec. 1 Purchased raw materials from Durbin Supply Company on account for $53,100.
Dec. 2 Issued $40,400 of direct materials from the company’s inventory to jobs other than K52 and J57 and $2,900 of indirect materials.
Dec. 12 Paid Waterways’ factory salaries and wages for $64,300.
Dec. 13 Paid the factory’s water bill of $9,000.
Dec. 18 Transferred $49,800 of costs from other completed jobs to finished goods.
Dec. 21 Paid the factory’s electric bill of $12,100 for Waterways’ factory.
Dec. 31 Made adjusting entries forth factory that included accrued property taxes of $11,900, prepaid insurance of $8,800, and accumulated depreciation of $16,000.

Set up the job cost sheets for Job No. J57 and Job No. K52. Determine the total cost for each manufacturing special order for these jobs. (Round unit costs to 2 decimal places, e.g. 12.25.)

Job No. J57 Job No. K52
Total Cost $ $
Unit Cost $ $

Solutions

Expert Solution

Job No. J57 Job No. K52
Total cost $ 9,910 $ 5,648
Unit cost $ 49.55 $ 56.48
Working Notes
Raw materials used
on December 2 $ 5,019
on December 8                       1,059
on December 14 3,459
Total Raw material used $ 9,537
Raw material used for J57 (9,537 × 2/3) $ 6,358
Raw material used for K52 (9,537 × 1/3) $ 3,179
Direct labor cost
Total time spent for two projects (hours)                            18
Labor cost per hour $ 15.50
Direct labor cost (18 × $ 15.5) $ 279
Direct labor cost used for J57 (279 × 2/3) $ 186
Direct labor cost used for K52 (279 × 1/3) $ 93
Predetemined overhead rate
Budgeted machine hours                       2,125
Budgeted manufacturing overhead $ 841,500
Predetemined overhead rate (841,500 / 2,125) $ 396 per machine hour
Manufacturing overhead for jobs
J57 (8.5 hours × $ 396) $ 3,366
K52 (6 hours × $ 396) $ 2,376
Cost Sheet
J57 K52
Direct Material $ 6,358 $ 3,179
Direct labor 186 93
Manufacturing overhead                       3,366                       2,376
Total Cost (a) $ 9,910 $ 5,648
Number of units produced (b)                          200                          100
Cost per unit (a/b) $ 49.55 $ 56.48

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