Question

P19-30A

​Construction, Inc. is a home builder in Arizona.

MemoryMemory uses a job order costing system in which each house is a job. Because it constructs​ houses, the company uses an account titled Construction Overhead. The company applies overhead based on estimated direct labor costs. For the​ year, it estimated construction overhead of $1,050,000 and total direct labor cost of $2,100,000.The following events occurred during August​:

a.	Purchased materials on​ account, $ 420 comma 000$420,000
b.	Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned.
	Direct Materials Direct Labor House 402 $54,000 $42,000 House 403 67,000 32,000 House 404 63,000 56,000 House 405 88,000 53,000
c.	The company incurred total wages of $ 300 comma 000$300,000. Use the data from Item b to assign the wages. Wages are not yet paid.
d.	Depreciation of construction​ equipment, $ 6 comma 600$6,600
e.	Other overhead costs​ incurred: Equipment rentals paid in​ cash, $ 39 comma 000$39,000​; Worker liability insurance​ expired, $ 5 comma 000$5,000.
f.	Allocated overhead to jobs.
g.	Houses​ completed: 402, 404
h.	House sold on​ account: 404 for $ 210 comma 000

Requirements 1. Calculate Memory's predetermined overhead allocation rate for the year. 2. Prepare journal entries to record the events in the general journal 3. T-accounts for Work-in-Process Inventory and Finished Goods Inventory have been opened for you. Post the appropriate entries to these accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero 4. Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work-in-Process Inventory account. 5. Add the costs of the completed house that has not yet been sold, and show that this equals the ending balance in Finished Goods Inventory 6. Compute gross profit on the house that was sold. What costs must gross profit cover for Memory Construction? %) P1930A (similar to) Question Help Memory Construction, Inc. is a home builder in Arizona. Memory uses a job order costing system in which each house is a job. Because it constructs houses, the company uses an account titled Construction Overhead. The company applies overhead based on estimated direct labor costs. For the year, it estimated construction overhead of $1,050,000 and total direct labor cost of $2,100,000. The following events occurred during August: (Click the icon to view the events.)

Answer 1

1) Total budgeted overhead cost $1,050,000 $2,100,000 Estimated Direct labor cost 50.50 I$1050000/$2100000] Predetermined overhead rate per DL cost 50% of direct labor cost or

2) | Trans. # | Account Titles & Explanation a)Raw Materials Inventory Debit Credit Remarks and Workin 420,000 420,000 (To record raw materials purchased on account) Accounts Payable 455,000 (DM-$54000+$67000+$63000+$88000)+(DL $42000+$32000 $56000+$53000) b) Work in Process Inventory 272,000 Raw Materials Inventory Wages Payable $183,000 To record direct materials, direct labor & indirect labor incurred $117,000 [S300000 (DL $42000+$32000+$56000 $53000)] c) Construction Overhead 117,000 Wages Payable To record indirect labor cost incurred $6,600 d) Construction Overhead Accumulated depreciation $6,600 record depreciation of construction equipment $44,000 ($39000+$5000) e) Construction Overhead $39,000 Cash $5,000 To record equipment rent paid & workers liability insurance expired Prepaid insurance ($183000 x 50%) f) Work in Process Inventory $91,500 91,500(To apply construction overhead to work in process) Construction Overhead 264,000 (DM-s54000 + $63000) + (DL=$42000 + $56000) + [(DL=$42000 + $56000) x 5096] g) Finished Goods Inventory Work in Process Invento 264,000 (To record Cost of House 402 and 404 transferred to finished goods $210,000 h) Accounts Receivable 210,000 (To record sale of House 404 on account Sales revenue 147,000 (DM-S63000) + (DL-S56000) + [(DL-S56000) x 50%) Cost of Goods Sold 147,000 To record cost of House 404 sold Finished Goods Invent

Work in Process Inventory Finished Goods Inventory 3) Beg. Bal $0 g) so h) $264,000 $147,000 Beg. Bal $455,000 $91,500 $264,000 g) $282,500 $117,000 End. Bal End. Bal 5) WIP 4) F.G 4) & 5 COGS Totals House 402 House 403 House 405 House 404 From Beginning balance $0 Direct Materials $0 $0 $0 Direct Labors $0 $0 $0 Factory Overhead $0--> Total beginning WIP] Beginning goods in process For April $54,000 $67,000$88,000 $63,000 $272,000 $183,000 Direct Materials $42,000$ $21,000 $16,000 $26,500 $32,000$53,000 $56,000 Direct Labors $28,000 $91,500[Ref: NOTE-1] Construction Overhead $117,000$ $115,000$167,500$147,000 $546,500 Total costs added UnsoldIncomplete Incomplete Status at the end Sold $282,500 ($115000 $167500)

$210,000 6 House 404's sale value Cost of House 404 sold $147,000 $63,000 [$210000 $147000] Gross Profit