Question

Step 1 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 $2,400.00 Table Leg $850.00 Drawer $440.00 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 $4,500.00 b. Rent for the factory per month $900.00 c. Depreciation of factory equipment per month $600.00 Total Estimated manufacturing overhead $6,000.00 What is the predetermined manufacturing overhead rate? Blank 1 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, $24,000. 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, $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 $5,000. 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 $900. 17-Dec Advertising costs incurred but not paid for the month was $1,600. 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 $29,000 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 Check Figure: Cost of Goods Manufactured= $8,980, Net operating income=$14,270 What is the ending balance for raw materials? Blank 2 What is the ending balance for work in process? Blank 3 What is the ending balance for finished goods? Blank 4 What is the actual manufacturing overhead cost incurred during December before adjustment? Blank 5 What is the total applied manufacturing overhead cost during December before adjustment? Blank 6 What is the unadjusted cost of goods sold? Blank 7 Was the manufacturing overhead for the month of December overapplied/underapplied ? Blank 8 What is the amount of Manufacturing overhead overapplied/underapplied? Blank 9 What is the adjusted cost of goods sold? Blank 10 What is gross margin? Blank 11 What is the total prime cost for Job#1? Blank 12 What is the total conversion cost for job #1? Blank 13 What is the total product cost for job#1? Blank 14 What was the period cost incurred for the month of December? Blank 15 What is the total variable cost incurred for Job #1(assume that all selling and administrative cost and all manufacturing overhead costs are fixed.)? Blank 16 What is the contribution margin for Job #1 (assume that all selling and administrative cost and all manufacturing overhead costs are fixed.)? Blank 17 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? can i get help with step 6,7,and 8

Answer 1

Step 1.

a.

Predetermined overhead rate per direct labor hour

500

Working:

Overhead Expenses
Factory supervisor salary	4500
Rent	900
Depreciation	600
Total estimated overhead	6000
Estimated direct labor hours	12
Predetermined overhead rate per direct labor hour	500

Journal Entries

THUNDERDUCK CUSTOM TABLE INC.
Journal Entries for the month of Dec.
Date	Account	Debit	Credit
Dec.1	Raw material	24000
	Accounts payable		24000
	(Purchase of raw material on account)
Dec.5	Work in process	5800
	Raw material		5800
	(Raw material for Job #1 issued)
Dec.10	Work in process	180
	Salaries & Wages Payable		180
	(Direct labour for Job#1 accounted )
	Manufacturing Overhead	5000
	Salaries & Wages	2000
	Salaries & Wages Payable		7000
	(Factory Supervisor & Administration salary)
	accounted)
Dec.15	Work in process	6240
	Raw material		6240
	(Raw material for Job #2 issued)
Dec.16	Manufacturing Overhead	900
	Accounts payable		900
	(Rent for the month accounted)
Dec.17	Advertising expense	1600
	Accounts payable		1600
	(Adevertising expense accounted)
Dec.20	Manufacturing Overhead	150
	Depreciation	600
	Accumulated Depreciation		750
	(Depreciation for the month accounted)
Dec.22	Work in process	3000
	Manufacturing Overhead		3000
	(Manufacturing overhead for Job#1 accounted)
	(6 hrs @$500 per hr)
Dec.26	Finished Goods	8980
	Work in process		8980
	(Job.#1 transferred to finished goods a/c)
Dec.28	Cost of goods sold	8980
	Finished Goods		8980
	(Cost of job#1 transferred to cost of goods sold)
Dec.28	Accounts Receivable	29000
	Sales		29000
	(Sale of table under Job#1 accounted)
Dec.31	Work in process	90
	Salaries & Wages Payable		90
	(Direct labour for Job#2 accounted)
Dec.31	Work in process	1500
	Manufacturing Overhead		1500
	(Manufacturing overhead for Job#2 accounted)
	(3 hrs @ $500 per hr)
Dec.31	Cost of goods sold	1550
	Manufacturing Overhead		1550
	(Under applied overhead transferred to COGS)

Cost sheets:

COST SHEET					Job#1
Date	Details	Amount	Date	Details	Amount
Dec.5	Raw material	5800		Finished goods	8980
Dec.10	Wages	180
	Manufacturing Overhead	3000
		8980			8980
COST SHEET					Job#2
Date	Details	Amount	Date	Details	Amount
Dec.15	Raw material	6240	Dec.31	Balance C/o	7830
Dec.31	Direct labor	90
Dec.31	Manufacturing Overhead	1500
		7830			7830
Jan.1	Balance b/d	7830

Ledger Accounts:

Raw Material
Dec.1	Accounts payable	24000	Dec.5	Work in process (Job.#1)	5800
			Dec.15	Work in process	6240
			Dec.31	Balance C/o	11960
		24000			24000
Accounts Payable
			Dec.1	Raw material	24000
			Dec.16	Manufacturing Overhead	900
			Dec.17	Advertising Expense	1600
Work in Process
Dec.5	Raw Material	5800	Dec.26	Finished goods	8980
Dec.10	Salaries & Wages Payable	180	Dec.31	Balance C/o	7830
Dec.15	Raw Material	6240
Dec.22	Manufacturing Overhead	3000
Dec.31	Salaries & Wages Payable	90
Dec.31	Manufacturing Overhead	1500
		16810			16810
Manufacturing Overhead
Dec.10	Salaries & Wages Payable	5000	Dec.22	Work in process	3000
Dec.16	Accounts Payable	900	Dec.31	Work in process	1500
Dec.20	Accumulated Depreciation	150	dec.31	Cost of goods sold	1550
		6050			6050
Cost of goods sold
Dec.26	Finished goods	8980	Dec.31	Income summary
Dec.31	Manufacturing overhead	1550
		10530			0
Finished Goods
Dec.31	Work in process	8980	Dec.31	Cost of goods sold	8980
		8980			8980
Accounts Receivable
Dec.28	Sales	29000
Sales
			Dec.28	Accounts Receivable	29000
Salaries & Wages Expense
Dec.10	Salaries & Wages Payable	2000
Salaries & Wages Payable
			Dec.10	Work in process	180
			Dec.10	Manufacturing Overhead	5000
			Dec.10	Salaries & Wages Expense	2000
			Dec.31	Work in process	90
Advertising
Dec.17	Accounts Payable	1600
Depreciation
Dec.20	Accumulated Depreciation	600
Accumulated Depreciation
			Dec.20	Manufacturing Overhead	150
			Dec.20	Depreciation	600

THUNDERDUCK CUSTOM TABLE INC.
Schedule of cost of goods manufactured
For the month ended December 31 , 20XX
DM purchases	24000
Less: Ending Raw nmaterial	11960
DM used	12040
DL	270
MOH applied	4500
Cost aded to WIP	16810
Less: WIP ennding	7830
COGMF	8980
THUNDERDUCK CUSTOM TABLE INC.
Schedule of cost of goods sold
For the month ended December 31 , 20XX
Beg. Finished goods	0
Cost of goods manufactured	8980
Available for sale	8980
Ending finished goods	0
COGS before adjustment	8980
Add: Overhead adjustment	1550
Adjusted COGS	10530
THUNDERDUCK CUSTOM TABLE INC.
Income statement
For the month ended December 31 , 20XX
Sales Revenue		29000
Less: COGS		10530
Gross Margin / Profit		18470
Less: Expenses:
Salaries and wages	2000
Advertising	1600
Depreciation	600
Total expenses		4200
Net operating income		14270