Question

Widmer Watercraft’s predetermined overhead rate is 200% of direct labor. Information on the company’s production activities during May follows.

a. Purchased raw materials on credit, $200,000.

b. Materials requisitions record use of the following materials for the month.

Job 136	$	48,000
Job 137		32,000
Job 138		19,200
Job 139		22,400
Job 140		6,400
Total direct materials		128,000
Indirect materials		19,500
Total materials used	$	147,500

3. Paid $15,000 cash to a computer consultant to reprogram factory equipment.
4. 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		3,000
Total direct labor		102,000
Indirect labor		24,000
Total	$	126,000

5. Applied overhead to Jobs 136, 138, and 139.
6. Transferred Jobs 136, 138, and 139 to Finished Goods.
7. Sold Jobs 136 and 138 on credit at a total price of $525,000.
8. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Depreciation of factory building	$	68,000
Depreciation of factory equipment		36,500
Expired factory insurance		10,000
Accrued property taxes payable		35,000

9. 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.

Answer 1

Job Cost Sheet

	Job No. 136	Job No. 137	Job No. 138	Job No. 139	Job No. 140
Materials	$            48,000	$               32,000	$       19,200	$            22,400	$              6,400
Labor	$            12,000	$               10,500	$       37,500	$            39,000	$              3,000
Overhead (200% of labor)	$            24,000	$               21,000	$       75,000	$            78,000	$              6,000
Total cost	$            84,000	$               63,500	$     131,700	$          139,400	$            15,400

	Account Titles	Debit	Credit
a.	Raw materials inventory	$          200,000
	Accounts payable		$             200,000
b.	Work in process inventory	$          128,000
	Manufacturing overhead	$            19,500
	Raw materials inventory		$             147,500
c.	Manufacturing overhead	$            15,000
	Cash		$               15,000
d.	Work in process inventory	$          102,000
	Manufacturing overhead	$            24,000
	Raw materials inventory		$             126,000
e.	Work in process inventory	$          177,000		=24000+75000+78000
	Manufacturing overhead		$             177,000
f.	Finished Work inventory	$          355,100		=84000+131700+139400
	Work in process inventory		$             355,100
g.	Accounts receivable	$          525,000
	Sales		$             525,000
	Cost of Work sold	$          215,700		=84000+131700
	Finished Work inventory		$             215,700
h.	Manufacturing overhead	$          149,500
	Acc. depreciation-Factory building		$               68,000
	Acc. depreciation-Factory equipment		$               36,500
	Prepaid insurance		$               10,000
	Property taxes payable		$               35,000
i.	Work in process inventory	$            27,000		=21000+6000
	Manufacturing overhead		$               27,600