Question

ry uses a job order casting system in which each house is a it estimated constru More Info b Because it contact houses the company uses an account titled ng events occurred during Aug allocation rate for Purchased materials on account, $420,000 Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned. Direct Materials Direct Labor House 402 $ 55,000 $ 46,000 House 403 66,000 32,000 House 404 64,000 55,000 House 405 88,000 54,000 C. The company incurred total wages of $220,000. Use the data from Item b to assign the wages. Wages are not yet paid. d. Depreciation of construction equipment, $6,300 e. Other overhead costs incurred: Equipment rentals paid in cash, $35,000; Worker liability insurance expired, $3,000. f. Allocated overhead to jobs. g. Houses completed: 402, 404 h. House sold on account: 404 for $240,000 Print Done Done] lds and then click Clear All

Answer 1

1) Predetermined overhead rate = Estimated overhead / Estimated DLC =
1000000/2000000 = $0.5 of every $DLC
2)
Date	Acc Titles	Debit $	Credit $
a	Materials	420000
	Accounts Payable		420000
	(materials purchased on credit)
c	Factory wages	220000
	Wages payable		220000
	(wages made payable)
b	WIP Inventory	273000
	Materials		273000
	(being material applied to production)
b	WIP Inventory	187000
	Factory Wages		187000
	(being labor applied to production)
d	Manufacturing ovehead	6300
	Depreciation		6300
	(depreciation recorded as overhead)
e	Manufacturing ovehead	38000
	Cash		35000
	Prepaid Insurance		3000
	(rental paid and insurance got expired0
f	WIP Inventory	93500		(187000*0.5)
	Manufacturing ovehead		93500
	(overhead applied to production)
g	FG Inventory	270500
	WIP Inventory		270500
	(Houses 402&404 completed and transferred to FG)
House	Mat.	Fact Lab.	OH	Total
402	55000	46000	23000	124000
404	64000	55000	27500	146500
Total	119000	101000	50500	270500
h	Accounts Receivable	240000
	Sales		240000
	(sale of house 404 made on account)
	COGS	146500
	FG Inventory		146500
	(Cost of sales recorded)
T-Accounts:
WIP Inventory account
OB	0	FG Inv.	270500
DM	273000	CB	283000
DL	187000
OH	93500
Total	553500	Total	553500
FG Inventory account
OB	0	COGS	146500
WIP Inv.	270500	CB	124000
Total	270500	Total	270500
Completed FG Inventory:
House	Mat.	Fact Lab.	OH	Total
402	55000	46000	23000	124000
Incomplete WIP Inventory:
House	Mat.	Fact Lab.	OH	Total
403	66000	32000	16000	114000
405	88000	54000	27000	169000
Total	154000	86000	43000	283000
Income Statement:
Sales	240000
Less:COGS	146500
Gross Profit	93500