Question

Exercise 5.38 Indigo's Van Service customizes light trucks according to customers' orders. This month the company worked on five jobs, numbered 207 through 211. Materials requisitions for the month were as follows: Other - Carpet Paint Electronics $ 40 $ 365 $ 550 80 185 395 420 190 145 65 - - Total $ 955 660 805 Ticket 207 208 209 210 211 Indirect Total costs - 765 935 $ 750 115 750 $ 4,220 An analysis of the payroll records revealed the following distribution for labour costs: 207 $ 1,500 - 208 $ 1,300 209 $900 Job Direct labour Indirect labour Total costs 210 $1,600 211 $ 400 - Other - $2,200 Total $5,700 2,200 $ 7,900 Other overhead costs (consisting of rent, amortization, taxes, insurance, utilities, etc.) amounted to $3,600. At the beginning of the period, management anticipated that overhead costs would be $6,400 and total direct labour would amount to $5,000. Overhead is allocated on the basis of direct labour dollars. Jobs 207 through 210 were finished during the month; Job 211 is still in process. Jobs 207 through 209 were picked up and paid for by customers. Job 210 is still on the lot, waiting to be picked up.

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer - Part 1) Sr. No. Debit Credit Journal Entry Account Titl and Explanation 1 Work in process Inventory (4220-750) Overhead cost control Raw Material Inventory (To record issue of material) 3470 750 4220 5700 2200 2 Work in process Inventory (7900-2200) Overhead cost control Wages Payable (To record labour cost) 7900 3600 3 Overhead cost Control Miscellaneous accounts (Manufacturing overheads incurred) 3600 OM 10 9 Omyl 7296 7296 4 Work in process inventory (6400/5000*570 Overhead cost control (Manufacturing overheads applied) 5 Finished goods inventory Work in process inventory (to record finished goods) 15439

10856 6 Cost of goods sold Finished goods inventory (to record cost of goods sold) 10856 bo ob-m 746 7 Overhead cost control Cost of goods sold (Overapplied overhead closed) 746 5 Note 6 1) 7 Finished goods = cost of job 207+ cost of job 208+ cost of job209 + cost of job 210 8 = (955+1500+(6400/5000*1500))+(1300+660+(6400/5000*1300))+(805+900+(6400/5000*900))+(935+1600+6400/5000*1600)) 9 = 4375 +3624+2857+4583 0 = $ 15439 -2 2) Cost of goods sold -3 = cost of job 207+ cost of job 208+ cost of job209 4 = (955+1500+(6400/5000*1500)) + (1300+660+(6400/5000*1300))+(805+900+(6400/5000*900)) -5 = 4375+3624+2857 -6 = $ 10856 8 3) overapplied overheads = applied overheads - actual overeheads 9 = (6400/5000*5700) - (750+2200+3600) 0] = $ 746