Question

Uudul ULUSL ULU.. why * Requirements e year Pre 1. Calculate Memory's predetermined overhead allocation rate for the year. 2. Prepare journal entries to record the events in the general journal. 3. T-accounts for Work-in-Process Inventory and Finished Goods Inventory have been opened for you. Post the appropriate entries to these accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero. 4. Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work-in-Process Inventory account. 5. Add the costs of the completed house that has not yet been sold, and show that this equals the ending balance in Finished Goods Inventory 6. Compute gross profit on the house that was sold. What costs must gross profit cover for Memory Construction? Print Done

Answer 1

Answer 1-

Pre Determined OH rate
Estimated OH cost $		10,00,000	A
Direct labour cost $		20,00,000	B
Pre Determined OH rate		0.50	(A/B)
% wise coverage		50%

Answer 2 - Journal Entries

Job wise cost determined including OH cost ( 50% of Labour cost)

	Direct Material $	Direct Labour $=b	Overhead -50% of Labour cost$(50%*b)	Total Cost($)
House 402	55,000	46,000	23,000	1,24,000
House 403	66,000	32,000	16,000	1,14,000
House 404	64,000	55,000	27,500	1,46,500
House 405	88,000	54,000	27,000	1,69,000
Total	2,73,000	1,87,000	93,500	5,53,500

	Need to pass following Journal Entry
No	Details		Debit($)	Credit($)
a	Purchase of Material
	Raw Material Inventory		4,20,000
	Account Payable			4,20,000
b	Work in Process Inventory		4,60,000
	Raw Material Inventory			2,73,000
	Wages payable			1,87,000
	( Accounted direct material ^
	used labour )
c	Overhead		33,000
	Wages payable			33,000
	( Total Wages payable $ 220,000
	so $ 187000 accounted as above , Balance
	amount ( $220000-$187000)
d	Overhead		6,300
	Accumulated Depreciation			6,300
e	Overhead		38,000
	Cash			35,000
	Prepaid Insurance( Worker liability Insurace - Expired)			3,000
	( cash incurred to Equipment rental)
f	Work in Process Inventory		93,500
	Overhead			93,500
	( as per Calculation - 50% of Direct labour cost)
	( 50% *$ 187000)
g	Finished Goods Inventory		2,70,500
	Work in Process Inventory			2,70,500
	( house completed 402 and 404)
	( as above calculated number)
h	Account Receivable		2,40,000
	Sales			2,40,000
I	Cost of goods Sold		1,46,500
	Finished GoodsInventory			1,46,500
	( House 404 cost
	( as above calculation)

Answer 3 T accounts

Work In process - Inventory
No	details	Debit ($)	details	Credit ($)
b	Raw Material Inventory	2,73,000
	Wages payable	1,87,000
F	Overhead	93,500
g			Finished Goods Inventory	2,70,500
			Closing Balance	2,83,000
	Total	5,53,500	Total	5,53,500
Finished Goods Inventory
No	details	Debit ($)	details	Credit ($)
g	Work in process Inventory	2,70,500
i			Cost of goods Sold	1,46,500
			Closing Balance	1,24,000
	Total	2,70,500	Total	2,70,500

Answer 4 & 5 - As per above House jpb cost sheet - House 402 - Unsold $ 124000, House 403 and 405 - Work in process stage House 403- $ 114000 and House 405-$169000 and House 404 - Sold and cost of goods sold - $ 146500

Answer 6 - Profit of House 404 :

As per Question House 404 sold with value
		Amnt($)
Sale Value $		2,40,000
Less - Cost of goods sold		1,46,500
( as calculated above)
Profit		93,500