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. |
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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. |
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Table Top |
$1,600.00 |
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Table Leg |
$450.00 |
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Drawer |
$360.00 |
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The company uses a job order costing system and
applies manufacturing overhead to jobs based on direct labor
hours. |
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The company estimates that there will be 12 direct
labor hours worked during the month. |
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The estimated manufacturing overhead cost for the
month is: |
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a. |
Factory supervisor salary per month |
$3,000.00 |
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b. |
Rent for the factory per month |
$1,200.00 |
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c. |
Depreciation of factory equipment per month |
$600.00 |
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Total Estimated manufacturing overhead |
$4,800.00 |
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What is the predetermined manufacturing overhead
rate? |
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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, $16,000. |
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: |
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There are three assembly
employees that spend 2 hours each, $30 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 $3,500. |
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 $1,200. |
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 $21,000 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, $30 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 |
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Check Figure: Cost of Goods Manufactured= $5,980,
Net operating income=$9,970 |
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What is the ending balance for raw materials? |
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What is the ending balance for work in
process? |
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What is the ending balance for finished goods? |
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What is the actual manufacturing overhead cost
incurred during December before adjustment? |
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What is the total applied manufacturing overhead
cost during December before adjustment? |
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What is the unadjusted cost of goods sold? |
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Was the manufacturing overhead for the month of
December overapplied/underapplied ? |
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What is the amount of Manufacturing overhead
overapplied/underapplied? |
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What is the adjusted cost of goods sold? |
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What is gross margin? |
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What is the total prime cost for Job#1? |
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What is the total conversion cost for job #1? |
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What is the total product cost for job#1? |
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What was the period cost incurred for the month of
December? |
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What is the total variable
cost incurred for Job #1(assume that all selling and administrative
cost and all manufacturing overhead costs are fixed.)? |
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What is the contribution
margin for Job #1 (assume that all selling and administrative cost
and all manufacturing overhead costs are fixed.)? |
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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? |