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.

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.

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).

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.

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.

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.

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).

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.

Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product lines appear below:   

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:    

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Do not round your intermediate calculations.)

2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):   

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative product margins should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places.)

Please provide a step by step solution

Key the names in indexing order using the ARMA rules. In the upper right corner of each card, key the corresponding number for each name

1. James R. Larsen
2. Bob O’Donald
3. Helen Vandermallie
4. Martha Odell-Ryan
5. Sister Catherine
6. George Harris, Ph.D.
7. Mrs. Georgia Harris
8. Father Jenkins
9. Ty Chen
10. Martha Odellman
11. Allens Swap Shop
12. J. T. Larson
13. Herbert Vander Mallie
14. George Harris, M.D.
15. Mary Allen’s Beauty Shop
16. Marshall Field & Company
17. Georgia Harris
18. Allens’ Print Shop
19. Trans-Continent Truckers
20. George Harris
21. James Larson
22. Hubert Vander Mallie
23. George E. Harris
24. Cayuga Industries
25. North East Fuel Supply
26. AAA Batteries
27. CHAM Radio
28. Higgins Cleaners
29. Electronics Laboratory, General Electric Company
30. Niagara Office Supply
31. Over-30 Club
32. Prince Arthur’s Hair Styling
33. C & H Television Repair
34. First Baptist Church
35. Hotel Isabella

36.   James Danforth, Jr.
37. Burns Travel Agency
38. Strathcona County Water Department
39. Norton R. Henson
40. Sister Marie O’Doul
41. The Lone Ranger Riding Supplies
42. The Jefferson Party House
43. El Rancho Inn
44. Cecil Young-Jones
45. RCT Manufacturers
46. Administrative Management Society
47. Hotel Baker
48. Triple-Star Enterprises
49. Miss Robert’s Charm School
50. Acadia University, Wolfville, Nova Scotia
51. Bob Guerin
52. William T. Au
53. Thomas Kaplan, M.D.
54. Irene McGregor
55. Arthur P. Van der Linden
56. Ontario Municipal Board
57. John Wilkins Supply Corp.
58. Southwestern Distributors
59. Department of Employment and Immigration
60. Four Corners Answering Service
61. Reliable Answering Service
62. Montgomery Ward & Co.
63. South East Pipeline
64. Webbers’ Home for the Aged
65. People’s Republic of China
66. Prince Albert Printing Co.
67. The Mercantile Bank of Canada
68. Aero Bolt and Screw Co., Montreal
69. Strong Memorial Hospital
70. .Surv-Ur-Self Pastries, Inc

Work in Process Account Data for Two Months; Cost of Production Reports

Pittsburgh Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process—Rolling on September 1 and debits to the account during September were as follows:

During September, 2,600 units in process on September 1 were completed, and of the 28,900 units entering the department, all were completed except 2,900 units that were 4/5 completed.

Charges to Work in Process—Rolling for October were as follows:

During October, the units in process at the beginning of the month were completed, and of the 31,000 units entering the department, all were completed except 2,000 units that were 2/5 completed.

Required:

2. Provide the same information for October by recording the October transactions in the four-column work in process account. Construct a cost of production report, and present the October computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank.

If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.

White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour.

The balance in the account Work in Process-Sifting Department was as follows on July 1:

The following costs were charged to Work in Process-Sifting Department during July:

During July, 15,500 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,100 units, 4/5 completed.

Points:

17 / 18

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1. Calculate equivalent units for direct materials and conversion costs.

1.

Direct Materials Purchases Budget

Pasadena Candle Inc. budgeted production of 785,000 candles for January. Wax is required to produce a candle. Assume 10 ounces of wax is required for each candle. The estimated January 1 wax inventory is 16,000 pounds. The desired January 31 wax inventory is 12,500 pounds. If candle wax costs $1.24 per pound, determine the direct materials purchases budget for January. (One pound = 16 ounces.) For those boxes in which you must enter subtracted or negative numbers use a minus sign.

2.

Pasadena Candle Inc. budgeted production of 785,000 candles for January. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for January. Wax is required to produce a candle. Assume 487,125 pounds of material will be purchased during January. The candle wax costs $1.24 per pound.

Prepare a cost of goods sold budget for Pasadena Candle Inc. using the information above. Assume the estimated inventories on January 1 for finished goods and work in process were $200,000 and $41,250, respectively and direct materials wax inventory of 16,000 pounds. Also assume the desired inventories on January 31 for finished goods and work in process were $120,000 and $28,500, respectively and direct materials wax inventory of 12,500 pounds. Factory overhead was budgeted at $300,000. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Question 3                                                                                  (Total: 25 marks)

Sikawan Systems manufactures two products in its Sabah division. Traditionally the company has used an overhead absorption system based on machine hours. However, following a management consultancy exercise in which outside consultants reviewed the management information systems, the directors have decided to pilot an Activity Based Costing system at the Sabah division. For the coming year, 2021, Sabah’s production overheads are estimated as follows:

Following a detailed review of the production processes, the finance director and the divisional accountant identify a set of key cost drivers, together with cost allocations to each, and estimates of the relevant quantities involved for products A and B in the 2021 financial year:

Each planned unit of production of both product A and product B uses one machine hour. One unit of A has a prime cost of RM12.50, while one unit of B has a prime cost of RM16.

Required:

a) Calculate the overhead absorption rate based on the company’s traditional system of using machine hours as a basis for overhead absorption.                      

b) Calculate the overhead per unit of product A and product B using the data provided for the new Activity Based Costing system.                                          

c) Calculate the production cost of one unit of product A and one unit of product B under both the old and the new costing systems.                                     

d) Comment on the difference between the production costs for each product under the old and the new costing systems.                                             

Question 3 – Better Than That, Co. provides the following information:

• October 31 inventory of raw materials is $35,000.
• Raw materials purchases in November are $240,000.
• Total factory payroll cost (includes both direct and indirect labor) in November is $105,850.
• Actual factory overhead costs incurred in November are as follows: indirect materials, $15,900; indirect labor, $9,000; factory rent, $25,000; factory utilities, $23,880; and factory equipment depreciation, $42,000.
• The predetermined overhead rate is 120% of direct labor cost.
• Job L5 is sold to a customer in November for $255,000 on account.
• Costs related to the three jobs worked on in November follow.

1. Determine:
   1. The WIP inventory account balance as of October 31^st.
   2. Total direct materials cost for November
   3. Total direct labor cost for November
   4. Total Applied factory OH cost for November
   5. The total costs assigned to each job as of November 30^th (including any balances from October 31).
2. Prepare journal entries for the month of November to record the below transactions (make sure to use proper journal entry formatting and include a brief description of each entry).

1. Raw materials purchases (on credit).
2. Direct materials used in production.
3. Direct labor paid in cash and assigned to Work in Process Inventory.
4. Overhead costs applied to Work in Process Inventory.
5. Indirect materials used and assigned to Factory Overhead.
6. Indirect labor paid in cash and assigned to Factory Overhead.
7. Actual other overhead costs incurred (assume Factory rent and utilities are paid in cash).
8. Transfer of Jobs L5 and T2 to Finished Goods Inventory.
9. Revenue from the sale of Job L5.
10. Cost of goods sold for Job L5.
11. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account (Assume the amount is not material).

3. Determine the November 30^th balances of the firm’s three inventory accounts:
   1. raw materials inventory account
   2. WIP inventory account
   3. finished goods inventory account (assume finished goods inventory balance as of October 31^st was $0).
4. Prepare a schedule of cost of goods manufactured for November.
5. Calculate the firm’s gross profit for November.