Exercise 3-10 Applying Overhead; Journal Entries; T-accounts [LO3-1, LO3-2]
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,192,500 in manufacturing overhead cost at an activity level of 559,000 machine-hours.
The company spent the entire month of January working on a large order for 12,900 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow:
Required:
1. Prepare journal entries to record items (a) through (f) above [ignore item (g) for the moment].
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T-accounts.
3. Prepare a journal entry for item (g) above.
4. If 10,100 of the custom-made machined parts are shipped to the customer in February, how much of this job’s cost will be included in cost of goods sold for February?
1.
No. | General Journal | Debit | Credit |
a. | Raw materials | 317000 | |
Accounts payable | 317000 | ||
(To record raw material purchased on account) | |||
b. | Work in process | 214400 | |
Manufacturing overheads | 53600 | ||
Raw materials | 268000 | ||
(To record materials used in production) | |||
c. | Work in process | 57000 | |
Manufacturing overheads | 114000 | ||
Wages payable | 171000 | ||
(To record labor cost accrued) | |||
d. | Manufacturing overheads | 63900 | |
Accumulated depreciation-factory equipment | 63900 | ||
(To record depreciation expense) | |||
e. | Manufacturing overheads | 84400 | |
Accounts payable | 84400 | ||
(To record other manufacturing costs incurred) | |||
f. | Work in process ($4192500 x 40890/559000) | 306675 | |
Manufacturing overheads | 306675 | ||
(To record manufacturing overheads applied) |
2.
Manufacturing Overhead | |||
b. | 53600 | 306675 | f. |
c. | 114000 | ||
d. | 63900 | ||
e. | 84400 | ||
Work in Process | |||
b. | 214400 | ||
c. | 57000 | ||
f. | 306675 | ||
578075 |
3.
No. | General Journal | Debit | Credit |
g. | Finished goods | 578075 | |
Work in process | 578075 | ||
(To record transfer to finished goods) |
4. Job cost included in cost of goods sold for February = $578075 x 10100/12900 = $452601.
Note: Under applied overheads have not been adjusted since no instructions regarding the same given in the question. Also journal entry g. has not not been posted to T-accounts since not required in question.
Exercise 3-10 Applying Overhead; Journal Entries; T-accounts [LO3-1, LO3-2] Dillon Products manufactures various machined parts to...
EXERCISE 3-10 Applying Overhead; Journal Entries; T-accounts LO3-10, L03-2 Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,800,000 in manufacturing overhead cost at an activity level of 240,000 machine-hours. The company spent the entire month of January working on a large order for...
Exercise 3-10 Applying Overhead; Journal Entries; T-accounts (LO3-1, LO3-2] Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,347,200 in manufacturing overhead cost at an activity level of 572,000 machine-hours. The company spent the entire month of January working on a large order for...
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Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,192,500 in manufacturing overhead cost at an activity level of 559,000 machine-hours. The company spent the entire month of January working on a large order for 12,200 custom-made machined parts. The company had no work...
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,800,000 in manufacturing overhead cost at an activity level of 240,000 machine-hours. The company spent the entire month of January working on a large order of 16,000 custom-made machined parts. The company had no work...
Dillon Products manufactures various machined parts to customer specifications. The company uses a job order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,800,000 in manufacturing overhead cost at an activity level of 240,000 machine hours. The company spent the entire month of January working on a large order for 16,000 custom-made machined parts. The company had...
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Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,245,000 in manufacturing overhead cost at an activity level of 566,000 machine-hours. The company spent the entire month of January working on a large order for 12,600 custom-made machined parts. The company had no work...
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