Question

Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.

Each knitter has a knitting machine that is used about 2/3 of the knitter’s time, the rest of the knitter’s time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.

The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.

	Required:
1.	Review the data in the Predetermined Factory Overhead Rate panel, and compute the predetermined factory overhead rate for POGP Company.
2.	On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition panel. A. Journalize the entry to record the addition of the materials to Work in Process.* B. On the Job Cost Sheets panel, add the materials to the Job Cost Sheet for Job 83.
3.	On December 15, review the source documents on the Time Tickets panel. A. Journalize the entry to record the addition of direct labor to Work in Process for the period December 1 through December 15.* B. Journalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15.* C. On the Job Cost Sheets panel, add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 62 for the period December 1 through December 15.
4.	On December 21, Job 62 is completed. Review the Job Cost Sheets panel and your journal entries. Journalize the entry to move the associated costs to the Finished Goods account.*
5.	On December 22, 75 of the 100 sweaters from Job 62 are sold on account for $125 each. Journalize the following transactions:* A. The entry to record the sale. B. The entry to record the transfer of costs from Finished Goods to Cost of Goods Sold.
6.	On December 31, the last work day of the year for the knitters, review the source documents on the Time Tickets panel. A. Journalize the entry to record the addition of direct labor to Work in Process for the period December 16 through December 31.* B. Journalize the entry to record the addition of factory overhead to Work in Process for the period December 16 through December 31.* C. On the Job Cost Sheets panel, add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 83 for the period December 16 through December 31.
7.	On December 31, journalize the following transactions.* Note that expenses (B), (C), and (D) were paid in cash. A. One month’s depreciation on equipment B. One month’s payroll for all employees C. One month’s rent of $1,000 D. One month’s utilities of $1,275
8.	On December 31, prepare the journal entry to dispose of the balance in the Factory Overhead account.*
9.	What are the balances in the following accounts as of December 31? A. Materials B. Work in Process C. Finished Goods D. Factory Overhead E. Cost of Goods Sold

hart of Accounts

CHART OF ACCOUNTS
POGP Company
General Ledger
ASSETS 110 Cash 112 Accounts Receivable 117 Supplies 118 Materials 119 Work in Process 120 Finished Goods 125 Equipment 126 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 211 Wages Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary	REVENUE 410 Sales EXPENSES 510 Cost of Goods Sold 520 Factory Overhead 525 Wages Expense

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Nov. 30 Trial Balance

POGP Company

UNADJUSTED TRIAL BALANCE

November 30, 20Y8

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	20,000.00
2	Accounts Receivable	1,000.00
3	Supplies	200.00
4	Materials	5,000.00
5	Work in Process	5,404.00
6	Equipment	12,000.00
7	Accumulated Depreciation-Equipment		825.00
8	Accounts Payable		150.00
9	Common Stock		10,000.00
10	Retained Earnings		12,000.00
11	Dividends	18,096.00
12	Sales		307,500.00
13	Cost of Goods Sold	255,040.00
14	Factory Overhead		15.00
15	Wages Expense	13,750.00
16	Totals	330,490.00	330,490.00

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Predetermined Factory Overhead Rate

Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base

A measure of activity that is related to changes in cost. Used in analyzing and classifying cost behavior. Activity bases are also used in the denominator in computing the predetermined factory overhead rate to assign overhead costs to cost objects.

for her predetermined factory overhead rate, rather than machine hours (MH).

Estimated Selected Amounts for the Year
Estimated depreciation on equipment	$1,200.00
Estimated total Office Manager/Knitting Supervisor wages	$30,000.00
Estimated office utilities	$3,000.00
Estimated factory utilities	$4,800.00
You are in Column Estimated Selected Amounts for the YearEstimated factory rent	You are in Column Estimated Selected Amounts for the Year$12,000.00

Activity Base Data
Estimated number of DLH for the year	5,000
You are in Column Activity Base DataEstimated number of MH for the year	3,500

Compute the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.

selector 1$6.60 per DLH

• $9.43 per DLH
• $10.20 per DLH
• Another amount per DLH
• $9.60 per DLH
• $6.60 per DLH

Points:

Feedback

Check My Work

Explanation

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Materials Requisition

Materials Requisition			Date: Dec. 10
Req. No. 12255	Job No. 83
Description	Qty. Issued	Unit Price	Amount
Yarn type B	600 skeins	$5.00	$3,000
		Total issued	$3,000

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Time Tickets

Time Ticket	No. 1255	Name:	Susan Blake
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	65	$20.00	$1,300.00
12/16-12/31	83	103	$20.00	$2,060.00
			Total Cost	$3,360.00

Time Ticket	No. 2274	Name:	Josh Porter
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	75	$20.00	$1,500.00
12/16-12/31	83	88	$20.00	$1,760.00
			Total Cost	$3,260.00

Time Ticket	No. 3923	Name:	Mary Jones
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	60	$20.00	$1,200.00
12/16-12/31	83	109	$20.00	$2,180.00
			Total Cost	$3,380.00

2 CengageNOWw2 |Onlie X agenow.com/ilmytakeAssignment/takeAssignmentMain.dotinvoker-atakeAssignmentsessiont.ocator inprogress false Calculator Mastery Problem: Job Order Costing Chart of Accounts Nov. 30 Trial Balance Purl of Great Price Company Job Cost Sheets Add the amounts in requirements 2(B), 3(C), and 6(C) to the appropriale areas of the following jotb cost sheets. If there is no amount or an amount is zero, enter 0 required, round your answers to the nearest cent. Job 62 Sweaters 100 units: Direct Labor Factory Overhead Direct Materials Total $5,404 $104 Balance Dec. 1 5,000 $300 S0 $0 Dec. 15 S0 $0 SO Total Cost Unit Cost Next Check My Work $47 PM

Answer 1

1	Predetermined factory overhead rate=Estimated manufacturing overhead/Estimated number of DLH for the year
	Estimated manufacturing overhead:
						$
	Depreciation					1200
	Total wages					30000
	Office utilities					3000
	Factory utilities					4800
	Factory rent					12000
	Total					51000
	Predetermined factory overhead rate=51000/5000=$ 10.2 per DLH
2
A.	Date	Account titles and explanation					Debit	Credit
	Dec. 10	Work in process					3000
		Materials						3000
		(Materials issued to job)
B.	Job 83	200 units:	Sweater vests
				Direct materials	Direct labor	Factory overhead	Total job cost
	Balance Dec. 1			0	0	0	0
	Dec. 15			3000			3000
3
A.	Date	Account titles and explanation					Debit	Credit
	Dec. 15	Work in process			(1300+1500+1200)		4000
		Wages payable						4000
		(Labor used in job)
B.	Date	Account titles and explanation					Debit	Credit
	Dec. 15	Work in process			(65+75+60)*10.2		2040
		Factory overhead						2040
		(Overhead applied to jobs)
C.	Job 62	100 units:	Sweaters
				Direct materials	Direct labor	Factory overhead	Total
	Balance Dec. 1			5000	300	104	5404
	Dec. 15				4000	2040	6040
	Total cost			5000	4300	2144	11444
					Unit cost	(11444/100)	114.44
4	Date	Account titles and explanation					Debit	Credit
	Dec. 21	Finished goods					11144
		Work in process						11144
		(Job 62 is completed)
5
	Date	Account titles and explanation					Debit	Credit
A.	Dec. 22	Accounts receivable				(75*125)	9375
		Sales						9375
		(Sale of Job 62-75 units sold)
B.	Dec. 22	Cost of goods sold				(75*114.44)	8583
		Finished goods						8583
		(Cost of goods sold recorded)