Question

Question 3 – Better Than That, Co. provides the following information:

• October 31 inventory of raw materials is $35,000.
• Raw materials purchases in November are $240,000.
• Total factory payroll cost (includes both direct and indirect labor) in November is $105,850.
• Actual factory overhead costs incurred in November are as follows: indirect materials, $15,900; indirect labor, $9,000; factory rent, $25,000; factory utilities, $23,880; and factory equipment depreciation, $42,000.
• The predetermined overhead rate is 120% of direct labor cost.
• Job L5 is sold to a customer in November for $255,000 on account.
• Costs related to the three jobs worked on in November follow.
  

	Job J1				Job L5				Job T2
Balances on October 31	:
Direct materials		$	0			$	0				$ 19,500
Direct labor			0				0				$6,850
Applied overhead			0				0				$8,220
Costs during November:
Direct materials			56,400				101,800			$	72,100
Direct labor			22,550				45,600				28,700
Applied overhead			?				?				?
Status on November 30	In process				Finished (sold)					Finished (unsold)

1. Determine:
   1. The WIP inventory account balance as of October 31^st.
   2. Total direct materials cost for November
   3. Total direct labor cost for November
   4. Total Applied factory OH cost for November
   5. The total costs assigned to each job as of November 30^th (including any balances from October 31).
2. Prepare journal entries for the month of November to record the below transactions (make sure to use proper journal entry formatting and include a brief description of each entry).

1. Raw materials purchases (on credit).
2. Direct materials used in production.
3. Direct labor paid in cash and assigned to Work in Process Inventory.
4. Overhead costs applied to Work in Process Inventory.
5. Indirect materials used and assigned to Factory Overhead.
6. Indirect labor paid in cash and assigned to Factory Overhead.
7. Actual other overhead costs incurred (assume Factory rent and utilities are paid in cash).
8. Transfer of Jobs L5 and T2 to Finished Goods Inventory.
9. Revenue from the sale of Job L5.
10. Cost of goods sold for Job L5.
11. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account (Assume the amount is not material).

3. Determine the November 30^th balances of the firm’s three inventory accounts:
   1. raw materials inventory account
   2. WIP inventory account
   3. finished goods inventory account (assume finished goods inventory balance as of October 31^st was $0).
4. Prepare a schedule of cost of goods manufactured for November.
5. Calculate the firm’s gross profit for November.

(I only need c,d, & e answered)

Answer 1

a. WIP inventory balance on October 31st: $ 34,570

Total direct materials cost for November: $ 230,300

Total direct labor cost for November : $ 96,850

Applied OH cost for November : $ 116,220

	Job J1	Job L5	Job T2
Total Cost Assigned	$ 106,010	$ 202,120	$ 169,810

b.

Transaction	General Journal	Debit	Credit
		$	$
1.	Raw Materials Inventory	240,000
	Accounts Payable		240,000
	Raw materials purchased on credit
2.	Work in Process Inventory	230,300
	Raw Materials Inventory		230,300
	Direct materials used in production
3.	Work in Process Inventory	96,850
	Cash		96,850
	Direct labor paid in cash and assigned to work in process inventory
4.	Work in Process Inventory	116,220
	Factory Overhead		116,220
	Overhead costs applied to work in process inventory
5.	Factory Overhead	15,900
	Raw Materials Inventory		15,900
	Indirect materials used and assigned to factory overhead
6.	Factory Overhead	9,000
	Cash		9,000
	Indirect labor paid in cash and assigned to factory overhead
7.	Factory Overhead	90,880
	Accumulated Depreciation		42,000
	Cash		48,880
	Other overheads incurred
8.	Finished Goods Inventory	371,930
	Work in Process Inventory		371,930
	Transfer of jobs to finished goods inventory
9. a.	Accounts Receivable	255,000
	Sales Revenue		255,000
	Revenue from sale of job L5
9.b.	Cost of Goods Sold	202,120
	Finished Goods Inventory		202,120
	Cost of goods sold
10	Factory Overhead	440
	Cost of Goods Sold		440
	Assignment of overapplied factory overhead to cost of goods sold

c.

	November 30th balance
Raw Materials Inventory	$ 28,800
Work in Process Inventory	106,010
Finished Goods Inventory	169,810

d.

Schedule of Cost of Goods Manufactured For the month ended November 30
Beginning work in process inventory	$ 34,570
Add: Manufacturing costs incurred during November
Direct materials	230,300
Direct labor	96,850
Factory overhead applied	116,220
Total Manufacturing Costs	443,370
Total Cost of Work in Process	477,940
Less: Ending work in process inventory	(106,010)
Cost of Goods Manufactured	$ 371,930

e.

Income Statement For the month ended November 30
Sales Revenue	$ 255,000
Less: Cost of Goods Sold	201,680
Gross Profit	$ 53,320