Question

2. Allenton Company is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 31,000 machine-hours and incur $252,650 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased, $412,176.on acok (AP) b. Raw materials were requisitioned for use in production, $409,850 (5388,400 direct and $21.450 indi- rect). c. The following employee costs were incurred: direct labor, $145.216; indirect labor, $61,356 and ad- ministrative salaries, $198.450. d. Factory utility costs, $14,823. e. Depreciation for the year was $121,000 of which $114.000 is related to factory operations and $7.000 is related to selling, general, and administrative activities. 1. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 29,071 ma- chine-hours (Hint: you need to compute a predetermined overhead rate to apply overhead). g. The cost of goods manufactured for the year was $783,075. h. Sales for the year totaled $1,107,000 and the costs on the job cost sheets of the goods that were sold totaled $768,990. (AR) en OGS in DC DC Required (4 Points): Prepare the appropriate journal entry for each of the items above.

Answer 1

	overhead rate = 252650/31000
			8.15
		thus overhead applied = 29071*8.15
				236929
No	Accounting titles & Explanations				Debit	Credit
a.	Raw materials inventory				412,176
	cash					412,176
b.	Work in process inventory				388,400
	Factory overhead				21,450
	Raw materials inventory					409,850
c.	Work in process inventory				145,216
	Factory overhead				61,356
	Administrative salaries				198,450
	Cash					405,022
d	Facotry overhead				14,283
	Cash					14,283
e	Factory overhead				114,000
	Selling,general & adm expense				7,000
	Accumulated depreciation					121,000
f	Work in process inventory				236,929
	Factory overhead					236,929
g	Finished goods inventory				783,075
	Work in process inventory					783,075
h	Cash				1,107,000
	Sales					1,107,000
	cost of goods sold				768,990
	Finished goods inventory					768,990
For raw materials purchases and for sales there is nothing mentioned that they
were on account hence I have assumed them to be cash transactions