Question

enu Prior to the beginning of 2016, Stapleton Company estimated that it would incur overhead cost during 2016, using 17,000 direct labor hours to produce the desired volume of january 1, 2016, beginning balances of Material Inventory were $48,000, $-0-, and $87,000, respectively. Required 153,000 of manufacturing goods. On s Inventory, Work in Process Inventory, and Finished Goods Prepare general journal entries to record the following for 2016 a. Purchased materials on account, $316,000. Description Debit Credit Materials inventory 16,000 Accounts payable 0 316,000 Page 8 b. Of the total dollar value of materials used, $284,000 represented direct material and $35,000 indirect material. Descriptiorn Debit Credit Work in process inventory 284,000 Manufacturing averhead 35,000 Materials inventory 0 319,00 c. Determined total factory labor, $189,000 (18,000 hrs.@$10.50/hr.). d. Of the factory labor, 15,800 were direct labor hours Description Debit Credit Work in process inventory 165,900 Manufacturing overhead 23,100 Wages payable 183,000 e. Applied manufacturing overhead based on direct labor hours to work in process. Description Debit Credit

Answer 1

Question 1: Prepare the following journal entries

Item	Account title and Explanation	Debit	Credit
a	Raw materials	$316,000
	Accounts payable		$316,000
	To record raw materials purchased on account
b	Work-in-process	$284,000
	Manufacturing overhead	$35,000
	Raw materials		$319,000
	To record raw material allocation
d	Work-in-process (15,800 × $10.5)	$165,900
	Manufacturing overhead (2,200 × $10.5)	$23,100
	Wages payable		$189,000
	To record employee service costs incurred
e	Work-in-process (153,000 ÷ 17,000 ) × 18,000	$162,000
	Manufacturing overhead		$162,000
	To record manufacturing overhead allocated
f	Manufacturing overhead	$83,000
	Accounts payable		$83,000
	To record manufacturing overhead incurred
g	Finished goods inventory	$554,900
	Work-in-process		$554,900
	To record completed work in process
	Cost of goods sold	$570,100
	Finished goods inventory		$570,100
	To record cost of goods sold
h	Manufacturing overhead	$20,900
	Cost of goods sold		$20,900
	To transfer the manufacturing overhead balance

Notes:

Raw Materials					Manufacturing overhead
Beg. Bal	$48,000	$284,000	b		Beg. Bal		$162,000	e
a	$316,000	$35,000			b	$35,000
					d	$23,100
					f	$83,000
End. Bal	$45,000						$20,900	End. Bal
Work in Process					Cost of Goods Sold
Beg. Bal	$0	$554,900	g		Beg. Bal		$20,900	h
b	$284,000				g	$570,100
d	$165,900
e	$162,000
End. Bal	$57,000				End. Bal	$549,200
Finished Goods Inventory
Beg. Bal	$87,000	$570,100
g	$554,900
End. Bal	$71,800

Question 2 : Compute the budgeted cost to manufacture a ultra-sound machine as follows

Particulars	Amount	Amount
Direct material		$8,000
Direct labor		$12,000
Manufacturing overhead
Engineering design ($6,000 ÷ (2 + 1)) × 1	$2,000
Material handling ($5,000 ÷ (400 + 600)) × 600	$3,000
Setups ($3,000 ÷ (8 + 7)) × 7	$1,400
Total manufacturing overhead		$6,400
Total manufacturing costs		$26,400
÷ Number of units produced		100
Cost of each ultra-sound machine		$264

Question 3: Prepare the following journal entries

Item	Account title and Explanation	Debit	Credit
a	Raw materials	$58,500
	Accounts payable		$58,500
	To record raw materials purchased on account
b	Work-in-process	$46,500
	Manufacturing overhead	$16,500
	Raw materials		$63,000
	To record raw material allocation
d	Work-in-process (22,500 × $9 × 80%)	$162,000
	Manufacturing overhead (2,200 × $10.5)	$40,500
	Wages payable		$202,500
	To record employee service costs incurred
e	Work-in-process (264,000 ÷ 24,000 ) × 22,500	$247,500
	Manufacturing overhead		$247,500
	To record manufacturing overhead allocated
f	Manufacturing overhead	$138,000
	Accounts payable		$138,000
	To record manufacturing overhead incurred
g	Finished goods inventory	$408,000
	Work-in-process		$408,000
	To record completed work in process
	Cost of goods sold	$387,000
	Finished goods inventory		$387,000
	To record cost of goods sold
h	Manufacturing overhead	$52,500
	Cost of goods sold		$52,500
	To transfer the manufacturing overhead balance

Notes:

Raw Materials					Manufacturing overhead
Beg. Bal	$42,000	$46,500	b		Beg. Bal		$247,500	e
a	$58,500	$16,500			b	$16,500
					d	$40,500
					f	$138,000
End. Bal	$37,500						$52,500	End. Bal
Work in Process					Cost of Goods Sold
Beg. Bal	$0	$408,000	g		Beg. Bal		$52,500	h
b	$46,500				g	$387,000
d	$162,000
e	$247,500
End. Bal	$48,000				End. Bal	$334,500
Finished Goods
Beg. Bal	$64,500	$387,000
g	$408,000
End. Bal	$85,500