Question

Bramble Company uses normal costing in its​ job-costing system. The company produces custom bikes for toddlers. The beginning balances​ (December 1) and ending balances​ (as of December​ 30) in their inventory accounts are as​ follows:

	Beginning Balance 12/1	Ending Balance 12/30
Material Control	$ 1,800	$ 8,200
Work-in-process control	6,400	8,700
Manufacturing Department Overhead Control	--	92,500
Finished Goods Control	4,100	19,100

Additional information​ follows:

a. Direct materials purchased during December were $66,000.

b. Cost of goods manufactured for December was $231,000.

c. No direct materials were returned to suppliers.

d. No units were started or completed on December 31 and no direct materials were requisitioned on December 31.

e. The manufacturing labor costs for the December 31 working​ day: direct manufacturing​ labor, $4,150​, and indirect manufacturing​ labor, $1,250.

f. Manufacturing overhead has been allocated at 150​%of direct manufacturing labor costs through December 31.

Question:

1.	Prepare journal entries for the December 31 payroll.
2.	Use​ T-accounts to compute the​ following:
	a.	The total amount of materials requisitioned into work in process during December
	b.	The total amount of direct manufacturing labor recorded in work in process during December​(Hint: You have to solve requirements 2b and 2c ​simultaneously)
	c.	The total amount of manufacturing overhead recorded in work in process during December
	d.	Ending balance in work in​ process, December 31
	e.	Cost of goods sold for December before adjustments for​ under- or overallocated manufacturing overhead
3.	Prepare closing journal entries related to manufacturing overhead. Assume that all​ under- or overallocated manufacturing overhead is closed directly to Cost of Goods Sold.

Answer 1

Part 1

Adjusting entry for 12/31 payroll.

transaction	Account titles and explanation	debit	credit
a	Work-in-Process Control	4150
	Manufacturing Department Overhead Control	1250
	Wages Payable Control		5400
	(To recognize payroll costs)
b	Work-in-Process Control	6225
	Manufacturing Overhead Allocated		6225
	(To allocate manufacturing overhead at 150% ´ $4,150 = $4,620 on $4,150 of direct manufacturing labor incurred on 12/31)

Part 2

Materials Control
Beginning balance 12/1 Purchases	1800 66000	59,600	Materials requisitioned
Balance 12/30	8200

1800+66000-8200 =59600

1. Direct materials requisitioned into work in process during December equals $59,600 as no materials are requisitioned on December 31.

Work-in-Process Control
Beginning balance 12/1 Direct materials             $59,600 Direct manf. labor             69480 Manf. overhead allocated                   104220	6400 233300	231,000	Cost of goods manufactured
Balance 12/30	8,700
(a) Direct manuf. labor 12/31 payroll	4150
(b) Manuf. overhead allocated 12/31	6225
Ending balance 12/31	19075

               $6400 + $59,600 + x + 1.50x – $231,000 = $8,700

               2.50x = $8,700 – $6400 – $59,600 + $231,000 = $173700

X= 173700/2.5 = 69480

Direct manufacturing labor up to 12/30 payroll = $69480

Manufacturing overhead allocated up to 12/30 = 1.50x × $69480 = $104220

Total direct manufacturing labor for December = $69480 + $4150 (direct manufacturing labor for 12/31 calculated in requirement 1) = $73630

Total manufacturing overhead allocated for December = $104220 + $6225 = $110445

(b)     Total direct manufacturing labor for December = $73630

(c)     Total manufacturing overhead allocated (recorded) in work in process = $110445

(d)     Ending balance in work-in-process inventory on December 31 = $8,700 + $4150 (direct manufacturing labor added on 12/31, requirement 1) + $6225 (manufacturing overhead allocated on 12/31, requirement 1) = $19075

Finished Goods Control
Beginning balance 12/1 Cost of goods manufactured	4100 231,000	216,000	Cost of goods sold
Balance 12/30	19100

4100+231000-19100 = 216000

(e)     Cost of goods sold for December before adjustments for under- or overallocated overhead equals $216,000

Part 3

      Manufacturing Overhead Allocated                                 110445

               Manufacturing Department Overhead Control                              109195

                           Cost of Goods Sold                                                                               1250

To close manufacturing overhead accounts and overallocated overhead to cost of goods sold