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Burlington Clock Works manufactures fine, handcrafted clocks. The firm uses a job-order costing system, and manufacturing...

Burlington Clock Works manufactures fine, handcrafted clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $240,000. The firm employs 10 master clockmakers, who constitute the direct-labor force. Each of these employees is expected to work 2,000 hours during the year, which represents each employee’s practical capacity. The following events occurred during October.

a. The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot.

b. Twenty brass counterweights were requisitioned for production. Each weight cost $23.

c. Five gallons of glue were requisitioned for production. The glue cost $20 per gallon. Glue is treated as an indirect material.

d. Depreciation on the clockworks building for October was $8,000.

e. A $400 utility bill was paid in cash.

f. Time cards showed the following usage of labor:

   Job number G60: 12 grandfather’s clocks, 1,000 hours of direct labor

   Job number C81: 20 cuckoo clocks, 700 hours of direct labor

   The master clockmakers (direct-labor personnel) earn $20 per hour.

g. The October property tax bill for $910 was received but has not yet been paid in cash.

h. The firm employs laborers who perform various tasks such as material handling and shop cleanup. Their wages for October amounted to $2,500.

i. Job number G60, which was started in July, was finished in October. The total cost of the job was $14,400.

j. Nine of the grandfather’s clocks from job number G60 were sold in October for $1,500 each.

Prepare journal entries to record the events described above

Solutions

Expert Solution

Transaction General Journal Debit Credit
a. Raw materials inventory (Mahogany veneer) 33000
Cash/Accounts payable (3000 x $11) 33000
(To record purchase on account)
b. Work in process inventory (20 x $23) 460
Raw materials inventory (brass weights) 460
(To record brass weights transferred to production)
c. Manufacturing overhead (5 x $20) 100
Raw materials inventory (glue) 100
(To record glue transferred to production)
d. Manufacturing overhead 8000
Accumulated depreciation-building 8000
(To record depreciation on clockworks building)
e. Manufacturing overhead 400
Cash 400
(To record utility bill paid in cash)
f(1). Work in process inventory-Job G60 (1000 x $20) 20000
Work in process inventory-Job C81 (700 x $20) 14000
Wages payable 34000
(To record direct labor cost incurred)
f(2). Work in process inventory-Job G60 (1000 x $12) 12000
Work in process inventory-Job C81 (700 x $12) 8400
Manufacturing overhead 20400
(To record manufacturing overhead applied to production)
g. Manufacturing overhead 910
Accounts payable 910
(To record property taxes bill)
h. Manufacturing overhead 2500
Wages payable 2500
(To record indirect wages incurred)
i. Finished goods inventory 14400
Work in process inventory 14400
(To record transfer of job cost to finished goods inventory)
j(1). Cash/Accounts receivable 13500
Sales revenue (9 x $1500) 13500
(To record sales)
j(2). Cost of goods sold (9 x $14400/12) 10800
Finished goods inventory 10800
(To record cost of sales)

Estimated manufacturing overhead rate = $240000/(10 x 2000 hours) = $240000/20000 = $12 per direct labor hour

ekkarill92 answered 1 year ago
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