Question

Problem 2 (75 points) mit S. TIETOA The Dougherty Furniture Company manufactures tables. In March, the production department had budgeted allocation base (i.e, cost driver) of 4,000 machine-hours. The budgeted manufacturing overheads for the month were $57,500. The company uses a budgeted overhead rate for applying overhead to production For Job 100A, the actual costs incurred in the production department were as follows: Production Department $110,000 Raw materials purchased Direct materials used Indirect materials used Direct labor incurred Indirect labor incurred Depreciation on plant equipment incurred Plant utilities incurred $7,500 $52,500 $11,000 $16,250 $1,000 Job 100A actually incurred 800 machine-hours in the production department. Required: à Prepare the necessary journal entries to summarize the following transactions for the production department. (60 points) 1) purchases of raw materials on credit 2) usage of direct materials and indirect materials 3) manufacturing payroll for direct labor and indirect labor paid in cash 4) depreciation on plant equipment 5) plant utilities paid in cash 6) allocation of manufacturing overhead to Job 100A b. Prepare an adjusting entry for Job 100A to write off the difference between allocated and actual overhead directly to Cost of Goods Sold. (15 points)

Answer 1

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The Dougherty Furniture Company
Workings for Answer a:
Calculation of Predetermined OH Rate	Amount $	Note
Budgeted Machine Hours	4,000.00	See C
Budgeted manufacturing Overhead	57,500.00	D
Predetermined OH Rate	14.375	E=D/C
Overhead allocated to Job 100 A	Amount $	Note
Machine Hours used	800.00	See A
Predetermined OH Rate	14.375	See E
Overhead allocated to Job 100 A	11,500.00	F=A*E

Answer a:
Event	Account	Debit $	Credit $
1	Raw Material Inventory	110,000.00
	Accounts Payable		110,000.00
2	Work in Process	32,500.00
	Manufacturing Overhead	7,500.00
	Raw Material Inventory		40,000.00
3	Wages Expense- Direct	52,500.00
	Wages Expense- Indirect	11,000.00
	Cash		63,500.00
4	Depreciation expense- Plant Equipment	16,250.00
	Accumulated Depreciation - Plant Equipment		16,250.00
5	Plant Utilities	1,000.00
	Cash		1,000.00
6	Work in Process	11,500.00
	Manufacturing Overhead		11,500.00

Workings for Answer b:
Actual Overhead for Job 100 A	Amount $	Note
Indirect Materials	7,500.00
Indirect Labor	11,000.000
Depreciation expense- Plant Equipment	16,250.00
Plant Utilities	1,000.00
Actual Overhead for Job 100 A	35,750.00	G
Under applied overhead	Amount $
Actual Overhead for Job 100 A	35,750.00	See G
Overhead allocated to Job 100 A	11,500.00	See F
Under applied overhead	24,250.00	H=G-F

Answer b:
Event	Account	Debit $	Credit $
7	Cost of goods sold	24,250.00
	Manufacturing Overhead		24,250.00