Kelly sells orange juice in a competitive market on a busy street corner in New York. Her production function is ?(?1, ?2) = ?1 1/3 ?2 1/3, where output is measured in gallons, ?1 is number of pounds of oranges she uses, and ?2 is the number of labor-hours spent squeezing them. ?1 = $16 is the cost of a pound of oranges and ?2 = $2 is the wage rate for orange-squeezers.
At the cost minimizing input bundle, how much labor-hours are spent per pound of oranges? That is,
compute the ratio of x2/x1 at the cost minimizing input bundle
b) What is the optimal inputs bundle to produce 8 units of output in the cheapest way?
c) What is the minimized cost of producing 8 units of output?
d) Calculate the average cost when total cost of production is minimized and output is 8 units
e) If market price of orange juice is $20 per unit (p=$20), conditional on Kelly is now producing 8 units of
output in the cheapest way, what is Kelly’s total profit? Determine Kelly’s supply decision in long run
In: Economics
Daosta Inc. uses the FIFO method in its process costing system. The following data concern the op... Daosta Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Units in process 900 Percent complete with respect to materials 40 % Percent complete with respect to conversion 20 % Costs in the beginning inventory: Materials cost $ 530 Conversion cost $ 2108 Units started into production during the month 16,000 Units completed and transferred out 16,000 Costs added to production during the month: Materials cost $ 32,180 Conversion cost $ 416,512 Work in process, ending: Units in process 900 Percent complete with respect to materials 50 % Percent complete with respect to conversion 70 %
Using the FIFO method:
Equivalent Units of production for direct materials:
Equivalent units of production for conversion costs:
Cost per equivalent unit- direct materials:$
cost per equivalent unit- conversion costs:$
Total value of ending Work in process:$
Total value of units transferred out:$
In: Accounting
Nautical Accessories, Inc., manufactures women's boating hats. Manufacturing overhead is assigned to production on a machine-hour basis. For 2016, it was estimated that manufacturing overhead would total $357,180 and that 25,010 machine hours would be used.
Required:
a. Calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2016. (Round your answer to 2 decimal places.)
|
b. During April, 3,300 hats were made. Raw materials costing $6,930 were used, and direct labor costs totaled $9,110. A total of 780 machine hours were worked during the month of April. Calculate the cost per hat made during April. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
|
c. At the end of April, 1,280 hats were in ending inventory. Calculate the cost of the ending inventory and the cost of the hats sold during April. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
|
|||||||
In: Accounting
Question 5 [45]
Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The
company sells the lamps both for cash and on credit. Company management is
contemplating relaxing its existing credit standards in order to boost sales and profits.
The company provided you with the following information relating to this lamp:
The current selling price is R150.00 per unit.
Total sales for 2018 were 80 000 units.
The variable cost per unit is R80.00.
The total fixed cost is R1 200 000.
Current credit terms are 30 days from date of purchase.
Current bad debts are 1% of sales.
Owing to tough business conditions the company is considering relaxing its current credit
standards and in doing so, anticipates the following to happen as a result:
o An expected increase of 8% in current total sales
o An increase in the average collection period to 40 days
o An expected increase of 2% in bad debts
The company’s opportunity cost of tying up funds in trade receivables is 15%.
A trading year consists of 365 days.
Required
Show all calculations rounded off to the closest rand or nearest whole number.
Use the information provided by Gentronics in order to determine the impact of the proposed
relaxation in credit standards on profits.
Question 5 [45]
Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The
company sells the lamps both for cash and on credit. Company management is
contemplating relaxing its existing credit standards in order to boost sales and profits.
The company provided you with the following information relating to this lamp:
The current selling price is R150.00 per unit.
Total sales for 2018 were 80 000 units.
The variable cost per unit is R80.00.
The total fixed cost is R1 200 000.
Current credit terms are 30 days from date of purchase.
Current bad debts are 1% of sales.
Owing to tough business conditions the company is considering relaxing its current credit
standards and in doing so, anticipates the following to happen as a result:
o An expected increase of 8% in current total sales
o An increase in the average collection period to 40 days
o An expected increase of 2% in bad debts
The company’s opportunity cost of tying up funds in trade receivables is 15%.
A trading year consists of 365 days.
Required
Show all calculations rounded off to the closest rand or nearest whole number.
Use the information provided by Gentronics in order to determine the impact of the proposed
relaxation in credit standards on profits.
Question 5 [45]
Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The
company sells the lamps both for cash and on credit. Company management is
contemplating relaxing its existing credit standards in order to boost sales and profits.
The company provided you with the following information relating to this lamp:
The current selling price is R150.00 per unit.
Total sales for 2018 were 80 000 units.
The variable cost per unit is R80.00.
The total fixed cost is R1 200 000.
Current credit terms are 30 days from date of purchase.
Current bad debts are 1% of sales.
Owing to tough business conditions the company is considering relaxing its current credit
standards and in doing so, anticipates the following to happen as a result:
o An expected increase of 8% in current total sales
o An increase in the average collection period to 40 days
o An expected increase of 2% in bad debts
The company’s opportunity cost of tying up funds in trade receivables is 15%.
A trading year consists of 365 days.
Required
Show all calculations rounded off to the closest rand or nearest whole number.
Use the information provided by Gentronics in order to determine the impact of the proposed
relaxation in credit standards on profits.
Question 5 [45]
Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The
company sells the lamps both for cash and on credit. Company management is
contemplating relaxing its existing credit standards in order to boost sales and profits.
The company provided you with the following information relating to this lamp:
The current selling price is R150.00 per unit.
Total sales for 2018 were 80 000 units.
The variable cost per unit is R80.00.
The total fixed cost is R1 200 000.
Current credit terms are 30 days from date of purchase.
Current bad debts are 1% of sales.
Owing to tough business conditions the company is considering relaxing its current credit
standards and in doing so, anticipates the following to happen as a result:
o An expected increase of 8% in current total sales
o An increase in the average collection period to 40 days
o An expected increase of 2% in bad debts
The company’s opportunity cost of tying up funds in trade receivables is 15%.
A trading year consists of 365 days.
Required
Show all calculations rounded off to the closest rand or nearest whole number.
Use the information provided by Gentronics in order to determine the impact of the proposed
relaxation in credit standards on profits.
Question 5 [45]
Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The
company sells the lamps both for cash and on credit. Company management is
contemplating relaxing its existing credit standards in order to boost sales and profits.
The company provided you with the following information relating to this lamp:
The current selling price is R150.00 per unit.
Total sales for 2018 were 80 000 units.
The variable cost per unit is R80.00.
The total fixed cost is R1 200 000.
Current credit terms are 30 days from date of purchase.
Current bad debts are 1% of sales.
Owing to tough business conditions the company is considering relaxing its current credit
standards and in doing so, anticipates the following to happen as a result:
o An expected increase of 8% in current total sales
o An increase in the average collection period to 40 days
o An expected increase of 2% in bad debts
The company’s opportunity cost of tying up funds in trade receivables is 15%.
A trading year consists of 365 days.
Required
Show all calculations rounded off to the closest rand or nearest whole number.
Use the information provided by Gentronics in order to determine the impact of the proposed
relaxation in credit standards on profits.
Question 5 [45]
Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The
company sells the lamps both for cash and on credit. Company management is
contemplating relaxing its existing credit standards in order to boost sales and profits.
The company provided you with the following information relating to this lamp:
The current selling price is R150.00 per unit.
Total sales for 2018 were 80 000 units.
The variable cost per unit is R80.00.
The total fixed cost is R1 200 000.
Current credit terms are 30 days from date of purchase.
Current bad debts are 1% of sales.
Owing to tough business conditions the company is considering relaxing its current credit
standards and in doing so, anticipates the following to happen as a result:
o An expected increase of 8% in current total sales
o An increase in the average collection period to 40 days
o An expected increase of 2% in bad debts
The company’s opportunity cost of tying up funds in trade receivables is 15%.
A trading year consists of 365 days.
Required
Show all calculations rounded off to the closest rand or nearest whole number.
Use the information provided by Gentronics in order to determine the impact of the proposed
relaxation in credit standards on profits.
Question 5 [45]
Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The
company sells the lamps both for cash and on credit. Company management is
contemplating relaxing its existing credit standards in order to boost sales and profits.
The company provided you with the following information relating to this lamp:
The current selling price is R150.00 per unit.
Total sales for 2018 were 80 000 units.
The variable cost per unit is R80.00.
The total fixed cost is R1 200 000.
Current credit terms are 30 days from date of purchase.
Current bad debts are 1% of sales.
Owing to tough business conditions the company is considering relaxing its current credit
standards and in doing so, anticipates the following to happen as a result:
o An expected increase of 8% in current total sales
o An increase in the average collection period to 40 days
o An expected increase of 2% in bad debts
The company’s opportunity cost of tying up funds in trade receivables is 15%.
A trading year consists of 365 days.
Required
Show all calculations rounded off to the closest rand or nearest whole number.
Use the information provided by Gentronics in order to determine the impact of the proposed
relaxation in credit standards on profits.
Question 5 [45]
Gentronics (Pty) Ltd manufactures and sells a rechargeable battery-operated lamp. The
company sells the lamps both for cash and on credit. Company management is
contemplating relaxing its existing credit standards in order to boost sales and profits.
The company provided you with the following information relating to this lamp:
The current selling price is R150.00 per unit.
Total sales for 2018 were 80 000 units.
The variable cost per unit is R80.00.
The total fixed cost is R1 200 000.
Current credit terms are 30 days from date of purchase.
Current bad debts are 1% of sales.
Owing to tough business conditions the company is considering relaxing its current credit
standards and in doing so, anticipates the following to happen as a result:
o An expected increase of 8% in current total sales
o An increase in the average collection period to 40 days
o An expected increase of 2% in bad debts
The company’s opportunity cost of tying up funds in trade receivables is 15%.
A trading year consists of 365 days.
Required
Show all calculations rounded off to the closest rand or nearest whole number.
Use the information provided by Gentronics in order to determine the impact of the proposed
relaxation in credit standards on profits.
In: Finance
Work in Process Account Data for Two Months; Cost of Production Reports
Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process—Filling on April 1 and debits to the account during April were as follows:
| Bal., 400 units, 80% completed: | ||
| Direct materials (400 x $4.30) | $ 1,720 | |
| Conversion (400 x 80% x $1.80) | 576 | |
| $ 2,296 | ||
| From Cooking Department, 9,720 units | $42,768 | |
| Direct labor | 11,498 | |
| Factory overhead | 6,191 | |
During April, 400 units in process on April 1 were completed, and of the 9,720 units entering the department, all were completed except 700 units that were 30% completed. Charges to Work in Process—Filling for May were as follows:
| From Cooking Department, 11,200 units | $51,520 |
| Direct labor | 14,810 |
| Factory overhead | 7,970 |
During May, the units in process at the beginning of the month were completed, and of the 11,200 units entering the department, all were completed except 500 units that were 40% completed.
Required:
1. Enter the balance as of April 1 in a four-column account for Work in Process—Filling. Record the debits and credits in the account for April. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion; (b) cost per equivalent unit; (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in April; and (d) work in process inventory. If an amount box does not require an entry, leave it blank.
| ACCOUNT | Work in Process-Filling Department | ACCOUNT NO. | ||||
|---|---|---|---|---|---|---|
| BALANCE | ||||||
| DATE | ITEM | POST. REF. | DEBIT | CREDIT | DEBIT | CREDIT |
| Apr. 1 | Bal., 400 units, 80% completed | |||||
| 30 | Cooking Dept., 9,720 units at $4.40 | |||||
| 30 | Direct labor | |||||
| 30 | Factory overhead | |||||
| 30 | Finished goods | |||||
| 30 | Bal., 700 units, 30% completed | |||||
If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.
| Hearty Soup Co. Cost of Production Report-Filling Department For the Month Ended April 30 |
|||
|---|---|---|---|
| Whole Units | Equivalent Units | ||
| Units | Direct Materials (a) | Conversion (a) | |
| Units charged to production: | |||
| Inventory in process, April 1 | |||
| Received from Cooking Department | |||
| Total units accounted for by the Filling Department | |||
| Units to be assigned costs: | |||
| Inventory in process, April 1 | |||
| Started and completed in April | |||
| Transferred to finished goods in April | |||
| Inventory in process, April 30 | |||
| Total units to be assigned costs | |||
| Costs | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Costs | Direct Materials | Conversion | Total | |||||||||
| Costs per equivalent unit: | ||||||||||||
| Total costs for April in Filling Department | $ | $ | ||||||||||
| Total equivalent units | ||||||||||||
| Cost per equivalent unit (b) | $ | $ | ||||||||||
| Costs charged to production: | ||||||||||||
| Inventory in process, April 1 | $ | |||||||||||
| Costs incurred in April | ||||||||||||
| Total costs accounted for by the Filling Department | $ | |||||||||||
| Cost allocated to completed and partially completed units: | ||||||||||||
| Inventory in process, April 1 balance (c) | $ | |||||||||||
| To complete inventory in process, April 1 (c) | $ | $ | ||||||||||
| Cost of completed April 1 work in process | $ | |||||||||||
| Started and completed in April (c) | ||||||||||||
| Transferred to finished goods in April (c) | $ | |||||||||||
| Inventory in process, April 30 (d) | ||||||||||||
| Total costs assigned by the Filling Department | $ | |||||||||||
2. Provide the same information for May by recording the May transactions in the four-column work in process account. Construct a cost of production report and present the May computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank.
| ACCOUNT | Work in Process-Filling Department | ACCOUNT NO. | ||||
|---|---|---|---|---|---|---|
| Balance | ||||||
| DATE | ITEM | POST. REF. | DEBIT | CREDIT | DEBIT | CREDIT |
| May 1 | Balance | |||||
| 31 | Cooking Dept., 11,200 units at $4.6 | |||||
| 31 | Direct labor | |||||
| 31 | Factory overhead | |||||
| 31 | Finished goods | |||||
| 31 | Bal., 500 units, 40% completed | |||||
If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.
| Hearty Soup Co. Cost of Production Report-Filling Department For the Month Ended May 31 |
|||
|---|---|---|---|
| Whole Units | Equivalent Units | ||
| Units | Direct Materials (a) | Conversion (a) | |
| Units charged to production: | |||
| Inventory in process, May 1 | |||
| Received from Cooking Department | |||
| Total units accounted for by the Filling Department | |||
| Units to be assigned costs: | |||
| Inventory in process, May 1 | |||
| Started and completed in May | |||
| Transferred to finished goods in May | |||
| Inventory in process, May 31 | |||
| Total units to be assigned costs | |||
In: Accounting
Work in Process Account Data for Two Months; Cost of Production Reports
Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process—Filling on April 1 and debits to the account during April were as follows:
| Bal., 1,000 units, 40% completed: | ||
| Direct materials (1,000 x $7.90) | $ 7,900 | |
| Conversion (1,000 x 40% x $3.30) | 1,320 | |
| $ 9,220 | ||
| From Cooking Department, 22,400 units | $179,200 | |
| Direct labor | 49,637 | |
| Factory overhead | 26,727 | |
During April, 1,000 units in process on April 1 were completed, and of the 22,400 units entering the department, all were completed except 1,800 units that were 70% completed. Charges to Work in Process—Filling for May were as follows:
| From Cooking Department, 25,800 units | $211,560 |
| Direct labor | 59,630 |
| Factory overhead | 32,105 |
During May, the units in process at the beginning of the month were completed, and of the 25,800 units entering the department, all were completed except 1,300 units that were 90% completed.
Required:
1. Enter the balance as of April 1 in a four-column account for Work in Process—Filling. Record the debits and credits in the account for April. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion; (b) cost per equivalent unit; (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in April; and (d) work in process inventory. If an amount box does not require an entry, leave it blank.
| ACCOUNT | Work in Process-Filling Department | ACCOUNT NO. | ||||
|---|---|---|---|---|---|---|
| BALANCE | ||||||
| DATE | ITEM | POST. REF. | DEBIT | CREDIT | DEBIT | CREDIT |
| Apr. 1 | Bal., 1,000 units, 40% completed | |||||
| 30 | Cooking Dept., 22,400 units at $8.00 | |||||
| 30 | Direct labor | |||||
| 30 | Factory overhead | |||||
| 30 | Finished goods | |||||
| 30 | Bal., 1,800 units, 70% completed | |||||
If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.
| Hearty Soup Co. Cost of Production Report-Filling Department For the Month Ended April 30 |
|||
|---|---|---|---|
| Whole Units | Equivalent Units | ||
| Units | Direct Materials (a) | Conversion (a) | |
| Units charged to production: | |||
| Inventory in process, April 1 | |||
| Received from Cooking Department | |||
| Total units accounted for by the Filling Department | |||
| Units to be assigned costs: | |||
| Inventory in process, April 1 | |||
| Started and completed in April | |||
| Transferred to finished goods in April | |||
| Inventory in process, April 30 | |||
| Total units to be assigned costs | |||
| Costs | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Costs | Direct Materials | Conversion | Total | |||||||||
| Costs per equivalent unit: | ||||||||||||
| Total costs for April in Filling Department | $ | $ | ||||||||||
| Total equivalent units | ||||||||||||
| Cost per equivalent unit (b) | $ | $ | ||||||||||
| Costs charged to production: | ||||||||||||
| Inventory in process, April 1 | $ | |||||||||||
| Costs incurred in April | ||||||||||||
| Total costs accounted for by the Filling Department | $ | |||||||||||
| Cost allocated to completed and partially completed units: | ||||||||||||
| Inventory in process, April 1 balance (c) | $ | |||||||||||
| To complete inventory in process, April 1 (c) | $ | $ | ||||||||||
| Cost of completed April 1 work in process | $ | |||||||||||
| Started and completed in April (c) | ||||||||||||
| Transferred to finished goods in April (c) | $ | |||||||||||
| Inventory in process, April 30 (d) | ||||||||||||
| Total costs assigned by the Filling Department | $ | |||||||||||
2. Provide the same information for May by recording the May transactions in the four-column work in process account. Construct a cost of production report and present the May computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank.
| ACCOUNT | Work in Process-Filling Department | ACCOUNT NO. | ||||
|---|---|---|---|---|---|---|
| Balance | ||||||
| DATE | ITEM | POST. REF. | DEBIT | CREDIT | DEBIT | CREDIT |
| May 1 | Balance | |||||
| 31 | Cooking Dept., 25,800 units at $8.2 | |||||
| 31 | Direct labor | |||||
| 31 | Factory overhead | |||||
| 31 | Finished goods | |||||
| 31 | Bal., 1,300 units, 90% completed | |||||
If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.
| Hearty Soup Co. Cost of Production Report-Filling Department For the Month Ended May 31 |
|||
|---|---|---|---|
| Whole Units | Equivalent Units | ||
| Units | Direct Materials (a) | Conversion (a) | |
| Units charged to production: | |||
| Inventory in process, May 1 | |||
| Received from Cooking Department | |||
| Total units accounted for by the Filling Department | |||
| Units to be assigned costs: | |||
| Inventory in process, May 1 | |||
| Started and completed in May | |||
| Transferred to finished goods in May | |||
| Inventory in process, May 31 | |||
| Total units to be assigned costs | |||
In: Accounting
Suppose we have two ways to source a product. One way is from the local supplier, while a second way is from a distant supplier.
The terms and parameters for each source are as given in following table:
| Local supplier | Distant supplier | |
|---|---|---|
| Cost per unit, c | $1.15 | $1.00 |
| Lead time (no uncertainty), L | 3 weeks | 12 weeks |
| Transportation cost per unit, ct | $0.10 | $0.12 |
Suppose demand for the component is μ=500/week; σ=100/week. (Assume normally distributed demand)
Suppose we have a holding cost of h=$0.01/week. This applies to all inventory in the system.
1. Compute the total landed cost per unit (equal to the procurement cost plus transportation cost plus holding cost for pipeline stock) for each source.
2. Suppose we source from a single supplier, and suppose we assume a periodic review policy with r = 1 week; suppose we have a shortage cost π = 0.30/unit.
What is the base stock for each option that minimizes the expected costs?
3. Suppose we follow the base stock policy calculated in Question 2.
What is the expected total cost per week for each option?
The expected total cost is the sum of the procurement cost, the transportation cost, the inventory holding cost for the pipeline inventory plus the cycle stock and safety stock, and the shortage cost.
4. Suppose we implement a dual sourcing strategy, and we place a standing order with the distant supplier for 350 units per week.
Suppose it is Jan. 7, 2019, which is a review epoch at which we place an order to the local supplier. The prior orders from both the local and distant supplier have been received and the inventory on hand is 1000 units.
There are two orders in process with the local suppler: an order for 75 units to be delivered on Jan. 14, and on order for 100 units to be delivered on Jan. 21. In addition, under the terms of the standing order, the distant supplier will deliver 350 units on Jan. 14, Jan. 21, Jan. 28, etc.
Suppose the base stock level for the local supplier is 2370.
How much is the local supplier order on Jan. 7 for delivery on Jan. 28?
In: Operations Management
Required information
[The following information applies to the questions
displayed below.]
Widmer Watercraft’s predetermined overhead rate for the year
2017 is 200% of direct labor. Information on the company’s
production activities during May 2017 follows.
Purchased raw materials on credit, $200,000.
Materials requisitions record use of the following materials for the month.
| Job 136 | $ | 49,500 | |
| Job 137 | 33,000 | ||
| Job 138 | 19,600 | ||
| Job 139 | 23,000 | ||
| Job 140 | 6,800 | ||
| Total direct materials |
131,900 |
||
| Indirect materials | 21,000 | ||
| Total materials used | $ | 152,900 | |
Paid $16,000 cash to a computer consultant to reprogram factory equipment.
Time tickets record use of the following labor for the month. These wages were paid in cash.
| Job 136 | $ | 12,000 | |
| Job 137 | 10,500 | ||
| Job 138 | 37,500 | ||
| Job 139 | 39,000 | ||
| Job 140 | 3,800 | ||
| Total direct labor | 102,800 | ||
| Indirect labor | 25,500 | ||
| Total | $ | 128,300 | |
Applied overhead to Jobs 136, 138, and 139.
Transferred Jobs 136, 138, and 139 to Finished Goods.
Sold Jobs 136 and 138 on credit at a total price of $550,000.
The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).
| Depreciation of factory building | $ | 69,000 | |
| Depreciation of factory equipment | 38,500 | ||
| Expired factory insurance | 10,000 | ||
| Accrued property taxes payable | 35,000 | ||
Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
4. Prepare a report showing the total cost of
each job in process and prove that the sum of their costs equals
the Work in Process Inventory account balance. Prepare similar
reports for Finished Goods Inventory and Cost of Goods
Sold.
|
|||||||||||||||||||||||||||||||
In: Accounting
Widmer Watercraft’s predetermined overhead rate for the year
2017 is 200% of direct labor. Information on the company’s
production activities during May 2017 follows.
Purchased raw materials on credit, $220,000.
Materials requisitions record use of the following materials for the month.
| Job 136 | $49,000 |
| Job 137 | 33,500 |
| Job 138 | 19,800 |
| Job 139 | 22,800 |
| Job 140 | 6,600 |
| Total direct materials |
131,700 |
| Indirect materials | 20,000 |
| Total materials used | $151,700 |
Paid $15,750 cash to a computer consultant to reprogram factory equipment.
Time tickets record use of the following labor for the month. These wages were paid in cash.
| Job 136 | $12,300 |
| Job 137 | 10,700 |
| Job 138 | 37,900 |
| Job 139 | 39,600 |
| Job 140 | 3,000 |
| Total direct labor | 103,500 |
| Indirect labor | 25,000 |
| Total | $128,500 |
Applied overhead to Jobs 136, 138, and 139.
Transferred Jobs 136, 138, and 139 to Finished Goods.
Sold Jobs 136 and 138 on credit at a total price of $550,000.
The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).
| Depreciation of factory building | $69,500 |
| Depreciation of factory equipment | 37,000 |
| Expired factory insurance | 12,000 |
| Accrued property taxes payable | 35,000 |
Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
1. Prepare a job cost sheet for each job worked on during the month.
2. Prepare journal entries to record the events and transactions a through i.
3. Post the journal entries for the
transactions to the following T-accounts, each of which started the
month with a zero balance.
4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Work in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.
In: Accounting
Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company’s production activities during May 2017 follows.
Purchased raw materials on credit, $200,000.
Materials requisitions record use of the following materials for the month.
| Job 136 | $ | 49,000 | |
| Job 137 | 33,000 | ||
| Job 138 | 19,800 | ||
| Job 139 | 23,200 | ||
| Job 140 | 7,000 | ||
| Total direct materials |
132,000 |
||
| Indirect materials | 21,000 | ||
| Total materials used | $ | 153,000 | |
Paid $16,000 cash to a computer consultant to reprogram factory equipment.
Time tickets record use of the following labor for the month. These wages were paid in cash.
| Job 136 | $ | 12,000 | |
| Job 137 | 10,700 | ||
| Job 138 | 37,900 | ||
| Job 139 | 39,200 | ||
| Job 140 | 3,800 | ||
| Total direct labor | 103,600 | ||
| Indirect labor | 26,500 | ||
| Total | $ | 130,100 | |
Applied overhead to Jobs 136, 138, and 139.
Transferred Jobs 136, 138, and 139 to Finished Goods.
Sold Jobs 136 and 138 on credit at a total price of $550,000.
The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).
| Depreciation of factory building | $ | 70,000 | |
| Depreciation of factory equipment | 37,000 | ||
| Expired factory insurance | 11,000 | ||
| Accrued property taxes payable | 36,500 | ||
Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
1. Prepare a job cost sheet for each job worked
on during the month.
2. Prepare journal entries to record the events
and transactions a through i.
3. Post the journal entries for the transactions
to the following T-accounts, each of which started the month with a
zero balance.
4. Prepare a report showing the total cost of
each job in process and prove that the sum of their costs equals
the Work in Process Inventory account balance. Prepare similar
reports for Finished Goods Inventory and Cost of Goods
Sold.
In: Accounting