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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.

1. Purchased raw materials on credit, $240,000.
2. Materials requisitions record use of the following materials for the month.

Job 136	$	48,500
Job 137		33,500
Job 138		19,600
Job 139		22,800
Job 140		6,600
Total direct materials		131,000
Indirect materials		21,000
Total materials used	$	152,000

3. Paid $15,250 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	$	12,100
Job 137		10,600
Job 138		38,100
Job 139		39,000
Job 140		3,400
Total direct labor		103,200
Indirect labor		26,000
Total	$	129,200

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 $545,000.
8. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Depreciation of factory building	$	68,500
Depreciation of factory equipment		37,000
Expired factory insurance		12,000
Accrued property taxes payable		37,000

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.

rev: 08_17_2017_QC_CS-95840

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.

Answer 1

Answer

Finished Goods Bening Balance Job No Job 135 Job 133 Job 139 Factory Labor 12. DO 38. DO 2.500 of Direct Labor 24209 75,200 78,000 Cost of work in Goods sold progress 84,800 1,33,900 Total 84,800 1,33,900 1.39,800 DO Sub Total 90.900 3.58.500 2.18,700 23,200 1. DO Job 140 Sub Total General 1,78,400 21,200 6.900 2,06,400 4,40,600 2,18,700 121.000 21,000 1.9.000 02200 25,000 129,200 2,05,400 4,87,600

Prepare Journal entries to record the transactions given above. 1,31,000 Work in process Raw Material raw materials Issued to production & Indirect material) 1,52,000 Work-In Process 1,03,200 Factory Payroll 1,29,200 2,06,400 Work In Process Manufacturing Overhead (200% of direct labor) 2,06,400 3,58,500 Finished Goods Work in process Job 136, 138 & 139 transferred to the finished goods) 3,58,500 5,45,000 Accounts Recelvable Sales Job 136 & 138 sold) 5,45,000 f 2,18,700 Cost of Goods Sold Finished Goods The total cost to produce the goods that were sold )) 2,18,700

T-Accounts Beg Bal $ 3.58.500 Work In Process Inventory - Jd $ 1,31,000 $ 1.03.200 $ 2.06.400 Balance $ 82 100 Beg Bal Finished Goods Inventory $ $ 3,58 500 f 5 1 ,39,800 218.700 Balance b) Computation of the cost of goods sold Cost of Goods Sold $ 2.18 700 Bal. 5 2 , 18, 700 calculate the cost of coods sold 2.18.700 Job 136 & Job 138 Calculate the balance in Work In Process as of May 31. 82.100 Job 137 & Job 140 Calculate the balance in Finished Goods as of June 30 1.39.800 job 139

Schedule of Cost of goods manufactured Raw materials used in production Direct labour Manufacturing overhead applied to work in process Total manufacturing costs Add: Work in process inventory, Opening 1,31,000 1,03,200 2,06,400 4,40,600 Deduct: Work in process inventory, Ending Cost of goods manufactured 4,40,600 82,100 $3,58,500 Cost of goods sold. Finished goods inventory, Beginning Add: Cost of goods manufactured Goods available for sale Deduct: Finished goods inventory,Ending Cost of Goods Sold 3,58,500 3,58,500 1,39,800 2,18,700