In: Accounting
A. The Green Company makes boats from wood. Job 489 is to build 40 rowboats.
Job 489 requires 1,000 pounds of wood costing $8 per pound. It requires 160 hours of direct labor costing $25 per hour. Also, use the following information about the company:
Total manufacturing overhead cost expected for all jobs during the whole year $400,000
Estimated direct labor hours for all jobs during the whole year 40,000
Calculate the following if the Green Company uses the traditional method of job order costing with one company-wide predetermined overhead rate using direct labor hours as the allocation base:
1. The predetermined overhead rate
2. The direct materials cost of job 489
3. The direct labor cost of job 489
4. The manufacturing overhead cost applied to job 489
5. The total cost of job 489
6. The cost per boat
Please make journal entries for the following transactions: of a manufacturing company:
B. The company purchased materials (both direct and indirect) on account (on credit) for $100,000
C. The company used $84,000 of direct materials.
D. The company used $7,000 of indirect materials.
E. The company incurred $50,000 of a liability (wages payable) for direct labor.
F. The company incurred $10,000 of a liability (wages payable) for indirect labor.
G. The company incurred $80,000 of manufacturing overhead, $15,000 of which was for depreciation on the factory machines and the rest was paid in cash.
H. The company allocated (applied) manufacturing overhead to various jobs using direct labor hours as the allocation base. The actual number of direct labor hours was 2,500 and the predetermined overhead rate was $34 per direct labor hour.
I. The cost of goods manufactured (finished) was $200,000.
J. Goods were sold on the account (on credit) for $400,000. The cost of the goods sold was $190,000.
(2 journal entries required for this one)
Assuming that a company’s total fixed cost is $7,000 and the variable cost per unit is $8, please calculate the following amounts if the company produces 4,000 units:
K. The total variable cost
L. The total cost
M. The average cost per unit
A.Total number of boats require to build for Job 489 = 40 boats
Total Pounds of woods required to build 40 boats = 1000 pound
Cost of per pound of wood = $8
Total hours of Direct labour require to build 40 boats = 160 hours
Labour cost per hour = $25
Total Manufacturing overhead cost expected for all the jobs during the whole year = $400,000
Estimated direct labour hours for all jobs during the whole year = 40,000
Manufacturing cost per direct labour hours = Total Manufacturing overhead cost
Total Direct Labour Hours
= $400,000/40,000
= $10/hour
= $8,000
= 160*25
= $4,000
Direct labour hours * Manufacturing cost per hour = 160*10
= $1,600
Direct Material: $8,000
Direct Labour: $4,000
Manufacturing: $1,600
Total Cost: $13,600
: $13,600/40
: $340/-
Journal Entries in the books of Manufacturing Company (Amount in $)
S.No |
Particular |
Debit |
Credit |
B. |
Raw Material To Accounts Payable |
100,000 |
100,000 |
C. |
Work In Progress To Raw Material |
84,000 |
84,000 |
D. |
Manufacturing Overhead To Raw Material |
7,000 |
7,000 |
E. |
Work In Progress To Salaries and Wages Payable |
50,000 |
50,000 |
F. |
Manufacturing Overhead To Salaries and Wages Payable |
10,000 |
10,000 |
G. |
Manufacturing Overhead To Accumulated Depreciation To Cash |
80,000 |
15,000 65,000 |
H. |
Work In Progress To Manufacturing Overhead (2,500*34) |
85,000 |
85,000 |
I. |
Finished Goods To Work In Progress |
200,000 |
200,000 |
J.1 |
Accounts Receivable To Sales Revenue |
400,000 |
400,000 |
J.2 |
Cost of Goods Sold To Finished Goods |
190,000 |
190,000 |
Company’s Total Fixed Cost: $7,000
Variable Cost per unit: $8
Total quantity produced: 4,000 Units
K. Total Variable Cost: Variable Cost per unit * total quantity produced
: 8*4,000
: $32,000
L. Total Cost: Variable Cost + Fixed Cost
: $32,000 + 4,000
: $36,000
M. Average cost per unit: Total Cost/Units
: $36,000/4000
: $9