Question

I need help with question 7

Sampson Company uses a job order cost system with overhead applied based on direct labor hours. See estimated amounts below. Note the beginning balances for Finished Goods (Job 101) and Work-in-Process (Jobs 102 & 103) for the costs accumulated to date. Also note, the beginning balances in the other balance sheet accounts. Estimated Overhead for 2014 720,000 Estimated Direct Labor Hours for 2014 24,000 During January the comapny had the following transactions: Purchased $10,000 of raw materials on account. Issued the following materials into production: Direct materials Amount Explanation 7,000 Job 102 Job 103 2,000 Used on both jobs. 2,000 5,000 Indirect materials Total 9,000 Recorded salaries and wages as follows: Direct labor Amount 10,000 6,000 4,000 Explanation Job 102 Job 103 For factory supervision For administrative staff Indirect labor 4,000 Salaries 5,000 Total 19,000 Applied overhead to jobs based on the number of direct labor hours required Job Number Job 102 Job 103 Direct labor hours 300 200 Total Recorded the following actual manufacturing costs: Amount Rent Depreciation Insurance Utilities Insurance Explanation 6,000 Paid factory rent in cash 5,000 Factory equipment 3,000 Had one month of factory insurance policy expire 2,000 Received factory utility bill but did not pay it. Total 16,000 Recorded the following general and administrative costs: Advertising Depreciation Other expenses Amount Explanation 2,000 Advertising paid in cash 3,000 Office equipment 1,000 Miscellaneous expense incurred but not paid. Total 6,000 Sold Job 101, which is recorded in Finished Goods: Sales Price Cost 55,000 30,000 (h) Completed Job 102 but did not sell it; Job 103 is still in process at year-end. ired: 1 Compute the predetermined overhead rate. Predetermined overhead rate $30 2 Compute how much overhead would be applied to jobs during the period: Overhead applied $15,000 3 Compute the total cost of Jobs 102 and 103 at the end of the period. You will enter your calculation in the 'Ledger Accounts' tab of this workbook. Where will the cost of each of these jobs appear on the Balance sheet? enter your answer to #3 here. $15000 4 Post the journal entries to the 'T' Accounts in the "Ledger Accounts' tab. Calculate the ending balances in all of the accounts. 5 Calculate the amount of over- or underapplied overhead in the 'Ledger Accounts' tab. 6 Post the journal entry in the T accounts to dispose of the overhead balance in the "Ledger Accounts' tab. 7 Prepare a statement of cost of goods manufactured report in the 'Reports' tab. 8 Prepare an income statement in the 'Reports' tab.

Answer 1

7.

Cost of Goods Manufactured Schedule
Direct Materials
Raw Material Beginning Inventory	$                 -
Raw Material Purchases	$        10,000
Less : Indirect Materials	$           2,000
Less : Raw Material Inventory	$           1,000
Direct Material Used in production		$           7,000
Direct Labor		$        10,000
Manufacturing Overhead applied		$        15,000
Total Manufacturing Costs		$        32,000
Beginning Work in process inventory		$        15,000
		$        47,000
Less: Ending Work in Process inventory		$        15,000	=5000+4000+200*30
Cost of goods manufactured		$        32,000

8

Income Statement
Sales Revenue		$        55,000
Less Cost of Goods Sold
Beginning Finished Goods Inventory	$        30,000
Add : Cost of Goods manufactured	$        32,000
Cost of Goods Available for sale	$        62,000
Less : Ending Finished Goods Inventory	$        32,000
Unadjusted Cost of Goods Sold	$        30,000
Under-/Overapplied Overhead	$           7,000
Adjusted Cost of Goods Sold		$        37,000
Gross Profit		$        18,000
Operating Expenses		$        11,000
Net Income		$           7,000

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