Tuesday, 14 June 2016
ABC Company’s has December unit sales of 12,000 units. Assuming a 5% growth, what is the projected unit sales.
Monday, 22 February 2016
In December 2012, Yerbury Company’s manager estimated next year’s total direct labor cost assuming 50 persons working an average of 2,000 hours each at an average wage rate of $25 per hour. The manager also estimated the following manufacturing overhead costs for year 2013.
In
December 2012, Yerbury Company’s manager estimated next year’s total
direct labor cost assuming 50 persons working an average of 2,000 hours
each at an average wage rate of $25 per hour. The manager also estimated
the following manufacturing overhead costs for year 2013.
| Indirect labor | $ | 319,200 | |
| Factory supervision | 240,000 | ||
| Rent on factory building | 140,000 | ||
| Factory utilities | 88,000 | ||
| Factory insurance expired | 68,000 | ||
| Depreciation—Factory equipment | 480,000 | ||
| Repairs expense—Factory equipment | 60,000 | ||
| Factory supplies used | 68,800 | ||
| Miscellaneous production costs | 36,000 | ||
| | | ||
| Total estimated overhead costs | $ | 1,500,000 | |
| | | ||
| | |||
At
the end of 2013, records show the company incurred $1,520,000 of actual
overhead costs. It completed and sold five jobs with the following
direct labor costs: Job 201, $604,000; Job 202, $563,000; Job 203,
$298,000; Job 204, $716,000; and Job 205, $314,000. In addition, Job 206
is in process at the end of 2013 and had been charged $17,000 for
direct labor. No jobs were in process at the end of 2012. The company’s
predetermined overhead rate is based on direct labor cost.
| Required | |
| 1.a | Determine the predetermined overhead rate for year 2013. |
2.
Assuming
that any over- or underapplied overhead is not material, prepare the
adjusting entry to allocate any over- or underapplied overhead to Cost
of Goods Sold at the end of year 2013.
| Predetermined overhead rate |
| Estimated overhead costs | $1,500,000 | $1,500,000 | ||||
| | = | | = | | = | 60% |
| Estimated direct labor cost | [50 × 2,000 × $25] | $2,500,000 |
1.c
| Overapplied or underapplied overhead determination |
| Actual overhead cost | $ | 1,520,000 | ||
| Less: Applied overhead cost | 1,507,200 | |||
| | | | ||
| Underapplied overhead | $ | 12,800 | ||
| | | |
After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.
Farina
Bay’s computer system generated the following trial balance on December
31, 2013. The company’s manager knows something is wrong with the trial
balance because it does not show any balance for Goods in Process
Inventory but does show balances for the Factory Payroll and Factory
Overhead accounts.
| Debit | Credit | |||||
| Cash | $ | 102,000 | ||||
| Accounts receivable | 75,000 | |||||
| Raw materials inventory | 80,000 | |||||
| Goods in process inventory | 0 | |||||
| Finished goods inventory | 15,000 | |||||
| Prepaid rent | 3,000 | |||||
| Accounts payable | $ | 17,000 | ||||
| Notes payable | 25,000 | |||||
| Common stock | 50,000 | |||||
| Retained earnings | 271,000 | |||||
| Sales | 373,000 | |||||
| Cost of goods sold | 218,000 | |||||
| Factory payroll | 68,000 | |||||
| Factory overhead | 115,000 | |||||
| Operating expenses | 60,000 | |||||
| | | | | |||
| Totals | $ | 736,000 | $ | 736,000 | ||
| | | | | |||
| | ||||||
|
After
examining various files, the manager identifies the following six
source documents that need to be processed to bring the accounting
records up to date.
|
| Materials requisition 21-3010: | $ | 10,200 | direct materials to Job 402 | |
| Materials requisition 21-3011: | $ | 18,600 | direct materials to Job 404 | |
| Materials requisition 21-3012: | $ | 5,600 | indirect materials | |
| Labor time ticket 6052: | $ | 36,000 | direct labor to Job 402 | |
| Labor time ticket 6053: | $ | 23,800 | direct labor to Job 404 | |
| Labor time ticket 6054: | $ | 8,200 | indirect labor | |
| | ||||
Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 200% of direct labor cost.
| a. | Direct materials costs to Goods in Process Inventory. |
| b. | Direct labor costs to Goods in Process Inventory. |
| c. | Overhead costs to Goods in Process Inventory. |
| d. | Indirect materials costs to the Factory Overhead account. |
| e. | Indirect labor costs to the Factory Overhead account. |
| Required: | |
| 1. |
Prepare journal entries to assign the above costs.
|
a.
b.
| Materials costs to Goods in process inventory : ($10,200 + $18,600) = $28,800 |
b.
| Labor costs to Goods in process inventory : ($36,000 + $23,800) = $59,800 |
2.1
Determine
the revised balance of the Factory Overhead account after making the
entries in part 1 using T-accounts. Determine whether there is any
under- or overapplied overhead for the year.
2.2
2.1
Prepare
the adjusting entry to allocate any over- or underapplied overhead to
Cost of Goods Sold, assuming the amount is not material.
| Revised Factory Overhead account | |||||
| Ending balance from trial balance | $ | 115,000 | debit | ||
| Applied to Jobs 402 and 404 | (119,600 | ) | credit | ||
| Additional indirect materials | 5,600 | debit | |||
| Additional indirect labor | 8,200 | debit | |||
| | | | |||
| Underapplied overhead | $ | 9,200 | debit | ||
| | | |
3.
Prepare a revised trial balance.
| Raw materials inventory |
| Balance per trial balance | $ | 80,000 | ||
| Less: Amounts recorded for Jobs 402 and 404 | (28,800 | ) | ||
| Less: Indirect materials | (5,600 | ) | ||
| | | | ||
| Ending balance | $ | 45,600 | ||
| | | | ||
| | ||||
| Goods in process inventory |
| Job 402 | Job 404 | Total | |||||||
| Direct materials | $ | 10,200 | $ | 18,600 | $ | 28,800 | |||
| Direct labor | 36,000 | 23,800 | 59,800 | ||||||
| Overhead | 72,000 | 47,600 | 119,600 | ||||||
| | | | | | | ||||
| Total cost | $ | 118,200 | $ | 90,000 | $ | 208,200 | |||
| | | | | | | ||||
| | |||||||||
| 4.1 |
Prepare an income statement for year 2013.
 |
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