Question

Waterways Problem 02 a-c (Part Level Submission)

Waterways has two major public-park projects to provide with comprehensive irrigation in one of its service locations this month. Job J57 and Job K52 involve 15 acres of landscaped terrain, which will require special-order, sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December.

Raw materials were requisitioned from the company’s inventory on December 2 for $5,091; on December 8 for $1,050; and on December 14 for $3,495. In each instance, two-thirds (2/3) of these materials were for J57 and the rest for K52.

Six time tickets were turned in for these two projects for a total amount of 18 hours of work. All the workers were paid $17.5 per hour. The time tickets were dated December 3, December 9, and December 15. On each of those days, 6 labor hours were spent on these jobs, two-thirds (2/3) for J57 and the rest for K52.

The predetermined overhead rate is based on machine hours. The expected machine hour use for the year is 2,096 hours, and the anticipated overhead costs are $838,400 for the year. The machines were used by workers on projects K52 and J57 on December 3, 9, and 15. Six machine hours were used for project K52 (2 each day), and 8.5 machine hours were used for project J57 (2.5 the first day and 3 each of the other days). Both of these special orders were completed on December 15, producing 200 sprinkler heads for J57 and 100 sprinkler heads for K52.

Additional job order activities during this period included:

Dec.	1		Purchased raw materials from Durbin Supply Company on account for $53,500.
Dec.	2		Issued $40,400 of direct materials from the company’s inventory to jobs other than K52 and J57 and $3,000 of indirect materials.
Dec.	12		Paid Waterways’ factory salaries and wages for $65,500.
Dec.	13		Paid the factory’s water bill of $9,000.
Dec.	18		Transferred $50,500 of costs from other completed jobs to finished goods.
Dec.	21		Paid the factory’s electric bill of $11,900 for Waterways’ factory.
Dec.	31		Made adjusting entries forth factory that included accrued property taxes of $12,100, prepaid insurance of $8,700, and accumulated depreciation of $16,000. (a) Set up the job cost sheets for Job No. 357 and Job No. 652. Determine the total cost for each manufacturing special order for these jobs. (Round unit costs to 2 decimal places, e.g. 12.25.) Job No. 357 Job No. 652 Total Cost $ Unit Cost

Answer 1

	Job No. J57	Job No. K52
Total cost	$                   9,034	$                   6,717
Unit cost	$                  45.17	$                   67.17
Working Notes
Raw materials used
on December 2	$                   5,091
on December 8	1,050
on December 14	3,495
Total Raw material used	$                  9,636
Raw material used for J57 (9,636 × 2/3)	$                   6,424
Raw material used for K52 (9,636 × 1/3)	$                   3,212
Direct labor cost
Total time spent for two projects (hours)	18
Labor cost per hour	$                  17.50
Direct labor cost (18 × $ 17.5)	$                      315
Direct labor cost used for J57 (315 × 2/3)	$                      210
Direct labor cost used for K52 (315 × 1/3)	$                      105
Predetemined overhead rate
Budgeted machine hours	2,096
Budgeted manufacturing overhead	$              838,400
Predetemined overhead rate (838,400 / 2,096)	$                      400	per machine hour
Manufacturing overhead for jobs
J57 (6 hours × $ 400)	$                   2,400
K52 (8.5 hours × $ 400)	$                   3,400
Cost Sheet
	J57	K52
Direct Material	$                   6,424	$                   3,212
Direct labor	210	105
Manufacturing overhead	2,400	3,400
Total Cost (a)	$                  9,034	$                   6,717
Number of units produced (b)	200	100
Cost per unit (a/b)	$                  45.17	$                   67.17