Question

QUESTION 1 Step 1 You work for Thunderduck Custom Tables Inc. This is the first month of operations. The company designs and manufactures specialty tables. Each table is specially customized for the customer. This month, you have been asked to develop and manufacture two new tables for customers. You will design and build the tables. This is a no nail, no screw, and no glue manufacturing (no indirect materials used). You will be keeping track of the costs incurred to manufacture the tables using Job #1 Cost Sheet and Job #2 Cost Sheet. The cost of the direct materials that can be used to manufacture the table are as follows. These cost are on a per unit basis. Table Top $2,400.00 Table Leg $850.00 Drawer $440.00 The company uses a job order costing system and applies manufacturing overhead to jobs based on direct labor hours. The company estimates that there will be 12 direct labor hours worked during the month. The estimated manufacturing overhead cost for the month is: a Factory supervisor salary per month b. Rent for the factory per month Depreciation of factory equipment per month Total Estimated manufacturing overhead $4,500.00 $900.00 $600.00 $6,000.00 What is the predetermined manufacturing overhead rate? 500 Step 2 Step 3 The first order you received was to manufacture a table using a table top and four legs. This is your job 1. The customer that has ordered Job #2, wants a table that is the same as job 81, but wants to also add a drawer to the table. Step 4 The following is a list of transactions that need to be recorded for the company for activity in the month of December. Record those in the "General Journal' tab of the excel file using the proper format. Please use the following accounts: Accounts Receivables, Raw materials, Work in process, Finished goods, Accumulated depreciation, Accounts payable, Salaries and wages payable, Sales revenue, Manufacturing overhead, Cost of goods sold, Salaries and wages expense, Advertising expenses, and Depreciation expense. 1-Dec Raw Materials purchased on account $24.000 Click Save and submit to save and submit. Click Save All Answers to save all

Answer 1

Step 1 Determination of the predetermined Manufacturing overhead rate :- Total estimated manufacturing Predetermined overhead cost Manufacturing Overhead Total estimated direct labor Rate = hours $6,000 $500 per direct labour hour Step 2 The first order you received was to manufacture a table using a table top and four legs. This is Job Cost Sheet Job Number Item Date Initiated Date Completed Direct Materials Amount 2,400 Direct Labor Hours Rate Amount 2 hours* 3 employees 6 hours $30.00 $ 180 Manufacturing Overhead Hours Rate Amount 6 $500 $ 3,000 $ Table Top Table Leg (850*4) Total 3,400 5,800 $ $ 1801 $ 3,000 Cost Summary Direct Materials Direct Labor Manufacturing Overhead Total Product Cost Unit Product Cost 5,800 180 3,000 8,980 8,980 Step 3 The customer that has ordered Job #2, wants a table that is the same as Job #1, but wants to also add a drawer to the table. :- Job Cost Sheet Job Number Item Date Initiated Date Completed Direct Materials Direct Labor Amount Hours Rate Amount 2,400 1 hour* 3 employees=3 hours $30.00$ 90 Manufacturing Overhead Hours Rate Amount $500 $ 1,500 $ 3,400 Table Top Table Leg (850*4) Drawer Total 440 6,240 $ 90 $ 1,500 Cost Summary Direct Materials Direct Labor Manufacturing Overhead Total Product Cost Unit Product Cost 6,240 90 1,500 7,830 7,830

Credit Step 4 Journal entries General Journal Sr. No. Description 1-Dec Raw Materials To Accounts payable (Being Raw materials purchased on account) Debit $24,000 Dr. $24,000 Dr. $ 5,800 5-Dec Work in Process To Raw Materials (Being Raw materials issued for use in Job #1) $5,800 10-Dec Work in Process (2 hours* 3 employees*$30 per hour) Manufacturing Overheads Salaries and Wages Expense To Salaries and wages payable (Being employee cost incurred) | Dr. Dr. 180 $5,000 $2,000 7,180 Dr. $ 6,240 15-Dec Work in Process To Raw Materials (Being Raw materials issued for use in Job #2) $6,240 Dr. $900 16-Dec Manufacturing Overheads To Rent Payable (Being Rent for the factory building incurred) $900 | Dr. Dr. $1,600 17-Dec Advertising Expenses To Advertising Expenses Payable (Being Advertising Expenses incurred) $1,600 $150 $600 Dr. 20-Dec Manufacturing Overheads Depreciation expense To Accumulated depreciation (Being depreciation charged on factory and office equipments) $750 Dr. $ 3,000 22-Dec Work in Process To Manufacturing Overheads $ 3,000 (Being Manufacturing Overheads charged to job #1 @ $500 per direct labour) (500 * 6) Dr. $ 8,980 26-Dec Finished Goods To Work in Process (Being job #1 completed) $ 8,980 $ 8,980 28-Dec Cost of goods sold To Finished Goods (Being goods sold transferred) $ 8,980 Dr. $29,000 28-Dec Account Receivable To Sales Revenue (Being goods sold on account) | $29,000 Dr 90 31-Dec Work in Process (1 hour* 3 employees* $30 per hour) To Salaries and wages payable (Being direct labor cost incurred) $ 1,500 31-Dec Work in Process Dr. L To Manufacturing Overheads (Being Manufacturing Overheads charged to job #2 @ $500 per $ 1,500 Dr. L $ 1,550 31-Dec Cost of goods sold To Manufacturing Overheads (Being underapplied overheads charged) $ 1,550

Step 5 T- Accounts Raw materials To Balance b/d To Accounts payable $ - $ 24,000 By Work in Process By Balance c/d 12,040 11,960 $ 24,000 $ 24,000 Work In Process $ - $ 12,040 $ 270 $ 4,500 By Finished Goods By Balance c/d To Balance b/d To Raw Materials To Salaries and wages payable To Manufacturing Overheads 8,980 7,830 $ 16,810 $ 16,810 Finished Goods - To Balance b/d $ 8,980 By Cost of goods sold By Balance c/d To Work in Process $ 8,980 $ 8,980 8,980 To Salaries and wages payable To Rent Payable To Accumulated depreciation Manufacturing Overheads $ 5,000 By Work in Process $ 900 By Cost of Goods Sold $ 150 By Balance c/d 4,500 1,550 $ 6,050 6,050 Cost of Goods Sold By Balance c/d To Finished Goods To Manufacturing Overheads $ 8,980 $ 1,550 10,530 $ 10,530 $ 10,530

To Sales Revenue Accounts Receivables $ 29,000 $ 29,000 By Balance c/d 29,000 29,000 $ Sales Revenue $ 29,000 To Balance c/d By Accounts Receivables $ 29,000 $ 29,000 29,000 To Balance c/d Accumulated depreciation $ 750 By Manufacturing Overheads By Selling & Administration Overheads 150 600 $ 750 750 To Balance c/d Rent Payable 900 900 By Manufacturing Overheads $ $ 900 900 To Balance c/d Advertising Expenses Payable $ 1,600 Advertising Expenses $ 1,600 1,600 1,600 To Balance c/d Accounts Payable $ 24,000 $ 24,000 By Raw Materials 24,000 24,000 To Balance c/d Salaries and wages payable $ 7,270 By Work in Process By Manufacturing Overheads By Salaries and Wages Expense $ 7,270 270 5,000 2,000 7,270 Salaries and wages Expenses To Salaries and wages payable $ 2,000 $ 2,000 By Balance c/d 2,000 2,000 $ To Advertising Expenses Payable Advertising Expenses $ 1,600 $ 1,600 By Balance c/d 1,600 1,600 To Accumulated depreciation Depreciation Expense $ 600 $ 600 By Balance c/d 600 600

Credit Trial Balance Debit 29,000 $ 11,960 $ 7,830 $ - Accounts Receivables Raw materials Work in process Finished goods Accumulated depreciation Accounts payable Rent payable Advertising Expenses Payable Salaries and wages payable Sales revenue, Manufacturing overhead Cost of goods sold Salaries and wages expense Advertising expenses Depreciation expense Total 750 24,000 900 1,600 7,270 29,000 $ s 10,530 2,000 1,600 600 63,520 $ $ $ 63,520 Manufacturing Overheads are underapplied for the month. Actual manufacturing overheads incurred $ 6,050 Applied manufacturing overheads (3000+1500) $ 4,500 Underapplied overheads $ 1,550 Step 6 Schedule of Cost of Goods Manufactured :- Add: Less: Thunderduck Custom Tables Inc. Schedule of Cost of Goods Manufactured For the Month Ended December 31, 20XX Particulars Beginning inventory of Raw Materials Purchases of raw Materials Raw material available for use Ending inventory of Raw Materials Raw material used in production Direct Labor Applied Manufacturing Overheads Total manufacuring costs Beginning inventory of Work in Process Total Cost of Work in process Ending inventory of Work in Process Cost of Goods manufactured Add: $24,000 $24,000 $11,960 $12,040 $ 270 $ 4,500 $16,810 $ - $16,810 $ 7,830 $ 8,980 Add: Less:

Thunderduck Custom Tables Inc.
Schedule of Cost of Goods Sold
For the Month Ended December 31, 20XX
	Beginning inventory of Finished Goods		$        -
Add:	Cost of Goods manufactured		$   8,980
	Cost of Goods available for sale		$   8,980
Less:	Ending inventory of Finished Goods		$        -
	Unadjusted Cost of Goods sold		$ 8,980
Add:	Underapllied overheads charged		$   1,550
	Adjusted Cost of Goods sold		$10,530
Step 7 Income Statement for the month
Thunderduck Custom Tables Inc.
Income Statement
For the Month Ended December 31, 20XX
	Sales		$ 29,000
Less:	Cost of Goods sold		$ 10,530
	Gross margin		$ 18,470
Less:	Salaries and wages Expenses		$     2,000
Less:	Advertising Expenses		$     1,600
Less:	Depreciation Expense		$        600
	Net operating income		$ 14,270
Step 8 Additional Questions
1	What is the ending balance for raw materials? (See Raw materials T-account above)				$                 11,960
2	What is the ending balance for work in process? (See Work in process T-account above)				$                   7,830
3	What is the ending balance for finished goods? (See Finished Goods T-account above)				$                          -
4	What is the actual manufacturing overhead cost incurred during December before adjustment? (See Manufacturing overheads T-account total above)				$                   6,050
5	What is the total applied manufacturing overhead cost during December before adjustment? (3000+1500)				$                   4,500
6	What is the unadjusted cost of goods sold? (See Schedule of Cost of Goods sold)				$                   8,980
7	Was the manufacturing overhead for the month of December overapplied/underapplied ?				Underapplied
8	What is the amount of Manufacturing overhead overapplied/underapplied? (See above working)				$                   1,550
9	What is the adjusted cost of goods sold? (See Schedule of Cost of Goods sold)				$                 10,530
10	What is gross margin? ((Gross Margin/Sales)*100)				63.69%
11	What is the total prime cost for Job#1? (Direct materials Cost+ Direct labor cost)				$                   5,980
12	What is the total conversion cost for job #1? (Direct labor cost+ Manufacturing overhead cost)				$                   3,180
13	What is the total product cost for job#1? (See cost summary in Job cost sheet)				$                   8,980
14	What was the period cost incurred for the month of December?   (Salaries of supervisor +Rent)				$                   5,900
15	What is the total variable cost incurred for Job #1(assume that all selling and administrative cost and all manufacturing overhead costs are fixed.)? (Direct materials Cost+ Direct labor cost)				$                   5,980
16	What is the contribution margin for Job #1 (assume that all selling and administrative cost and all manufacturing overhead costs are fixed.)? (Sales- variable cost as per 15 q.)				$                 23,020
17	What would be the actual (not applied) total fixed manufacturing overhead cost incurred for the company for the month if the order in Job #1 is for five tables instead of one table assuming this cost is with in the relevant range? (Fixed manufacturing cost will remain the same irrespective of no. of units produced) (See Manufacturing overheads T-account total above)				$                   6,050

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