Question

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 $1,100.00 Table Leg $200.00 Drawer $310.00 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 C Depreciation of factory equipment per month Total Estimated manufacturing overhead $3,000.00 $600.00 $600.00 $4,200.00 What is the predetermined manufacturing overhead rate? 350 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 #1, but wants to also add a drawer to the table. Step 4 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, $11,000.

Answer 1

	Predetermined manufacturing overhead rate=Total estimated manufacturing overhead/Total estimated direct labor hours=4200/12=$350 per direct labor hour
Step:4			General Journal
	Date	Description			Debit	Credit
	Dec 1.	Raw materials			11000
		Accounts payable				11000
		(Raw material purchased on account)
	Dec 5.	Work in process		1100+(4*200)	1900
		Raw materials				1900
		(Materials applied to Job #1)
	Dec 10.	Work in process		(3*2*25)	150
		Manufacturing overhead			3500
		Salaries and Wages expense			2000
		Salaries and Wages payable				5650
		(Employee costs incurred)
	Dec 15.	Work in process		1100+(4*200)+310	2210
		Raw materials				2210
		(Materials applied to Job #2)
	Dec 16.	Manufacturing overhead			600
		Accounts payable				600
		(Rent for the factory building)
	Dec 17.	Advertising expenses			1400
		Accounts payable				1400
		(Advertising cost incurred)
	Dec 20.	Manufacturing overhead			150
		Depreciation expense			600
		Accumulated depreciation				750
		(Depreciation recorded)
	Dec 22.	Work in process		(3*2*350)	2100
		Manufacturing overhead				2100
		(Manufacturing overhead cost applied)
	Dec 26.	Finished goods			4150
		Work in process				4150
		(Check Job cost sheet of Job #1)
		(Job #1 completed and transferred to
		Finished goods)
	Dec 28.	Accounts receivables			16000
		Sales revenue				16000
		(Job #1 sold on account)
		Cost of goods sold			4150
		Finished goods				4150
		(Cost of goods sold accounted)
	Dec 31.	Work in process		(3*1*25)	75
		Salaries and Wages payable				75
		(Direct labor cost incurred)
	Dec 31.	Work in process		(3*1*350)	1050
		Manufacturing overhead				1050
		(Manufacturing overhead cost applied)
	Dec 31.	Cost of goods sold		(See note below)	1100
		Manufacturing overhead				1100
		(Under-applied overhead adjusted)
	Note: Under applied or over applied overhead:
	Total manufacturing overhead incurred:
	Salary supervisor for the factory				3500
	Rent for factory building				600
	Depreciation on factory equipment				150
	Total manufacturing overhead incurred				4250
	Total manufacturing overhead applied:
	Job #1				2100
	Job #2				1050
	Total manufacturing overhead applied				3150
	Since the manufacturing overhead applied is less than the cost of manufacturing overhead incurred,Under application of overhead has incurred.
	under-applied overhead=4250-3150=$ 1100