Question

Hawthorn Company uses nor.al costing in its job costing system. Partially completed T-accounts and additional information for Hawthorn for 2017 are attached.

sob.costing system Partially completed T-accounts and additional information for HUWUTTI IUI 2011 (Click the icon to view the additional information) ect mate T-accounts 017 was Direct Materials Control 1-1-2017 43,000 230,000 133,000 Work-in-Process Control 1-1-2017 40,000 Dir. Manuf labor 350,000 Manufacturing Overhead Allocated Finished Goods Control 1-1-2017 8,000 758,100 923,380 Cost of Goods Sold Manufacturing Overhead Control 512,000 Print Done ck Check Answer.

a. Direct manufacturing labor wage rate was $10 per hour.
b. Manufacturing overhead was allocated at $13 per direct manufacturing labor hour.
c. During the year, sales revenues were $1,070,000, and marketing and distribution costs were $129,000.

1) What was the amount of direct materials issued to production during 2017?
2) What was the amount of manufacturing overhead allocated to jobs during 2017?
3) What was the total cost of jobs completed during 2017?
4) What was the cost of work in process inventory on December 31, 2017?
5) What was the cost if goods sold before probation if under or overallocated overhead?
6) What was the under or overallocated manufacturing overhead in 2017?
7) Dispose of the under or overallocated manufacturing overhead using the following:
     a. Write off to Costs of Goods Sold
     b. Proation based on ending balances (before proation) in Work in Process Control, Finished Goods Control, and Costs of Goods Sold.
8) Using each if the approaches in requirement 7, calculate Hawthorne's operating income for 2017.
9 Which approach in requirement 7 do you recommend Hawthorn use? Explain your answer briefly.

Answer 1

1. Amount of direct materials issued to production during 2017 = $230000

2. Amount of manufacturing overhead allocated to jobs during 2017 = $350000 / $10 x $13 = $455000

3. Total cost of jobs completed during 2017 = $923380

4. The cost of work in process inventory on December 31, 2017 = $40000+350000+230000+455000-923380 = $151620

5. The cost if goods sold before probation if under or overallocated overhead = $758100

6. Under or (over) allocated manufacturing overhead in 2017 = $512000 - $455000 = $57000

7. a.

Account Titles	Debit	Credit
Cost of Goods Sold	$           57,000
Manufacturing Overhead		$              57,000

b.

Account Titles	Debit	Credit
Work in Process Inventory	$             7,980		=57000/1083000*151620
Cost of Goods Sold	$           39,900		=57000/1083000*758100
Finished Goods Inventory	$             9,120		=57000/1083000*173280
Manufacturing Overhead		$              57,000
Balances
Work in Process Inventory	$        151,620
Cost of Goods Sold	$        758,100
Finished Goods Inventory	$        173,280
Total	$     1,083,000

8.

Operating Income
	Part a	Part b
Sales Revenue	$     1,070,000	$        1,070,000
Cost of Goods Sold	$        815,100	$           798,000
Gross Profit	$        254,900	$           272,000
Marketing and distribution costs	$        129,000	$           129,000
Operating Income	$        125,900	$           143,000