Question

8.7 Ledger accounts, over/under-applied, trading statement As the cost accountant for Purdy Products you are provided with the following information covering the manufacturing operations for June. (Note: GST is ignored in this question.) Ledger balances-1 June Finished goods Job 70 Job 73 Work in process Job 75 Material control 40 000 75 000 115 000 20 000 7 000 Labour control (credit) Factory overhead control (over-applied to date) 1 800 400 Material requisition summary Job 75 Job 76 4 500 14 250 6 830 12 420 500 Job 77 Job 78 Cleaning material Materials received in store 38 500 34 500 Time sheet summary Job 75 Job 76 Job 77 Hours 350 900 500 Job 78 Non-production 750 200 Additional information Plant operators are paid $30 per hour whereas non-production staff receive $20 per hour. The factory super visor receives a salary of $6 000 per month. The payroll summaries for the month indicate that gross factory wages paid were $82 000 Factory overhead is applied at $15 per direct labour hour During June $28 000 worth of overhead costs were paid in addition to those already given. A production summary at the end of June indicates thefollowing Jobs completed -jobs 75, 76 and 78 Jobs sold (selling price)-job 70 ($50 000), job 73 (S90 000), job 75 ($45 000) he end of the financial year

Required:

1. (a) Prepare ledger accounts for material control, labour control, factory overhead control, work in process and finished goods.

2. (b) Prepare a trading statement showing the gross margin on each job sold and the total gross profit for June.

Answer 1

working
Balance on June 30	Job 75	Job 76	Job 77	Job 78	June total
Beginning Goods on process A	$20,000	$0	$0	$0	$20,000
For June
Direct material	$4,500	$14,250	$6,830	$12,420	$38,000
Direct labor @ 30 per hour	$10,500	$27,000	$15,000	$22,500	$75,000
Applied overhead	$5,250	$13,500	$7,500	$11,250	$37,500
	(350*15)	(900*15)	(500*15)
Total cots added in April B	$20,250	$54,750	$29,330	$46,170	$150,500
Total cost A+B	$40,250	$54,750	$29,330	$46,170	$170,500
June 30 cost included in	Finsihed goods	Finsihed goods	work in process	Finsihed goods
ans 1
	Raw Material Inventory
	Debit	Amt	Credit	Amt
	Opening Balance	7000	WIP	$38,000
	accounts payable	$34,500	Factory Overhead	$500
	EndinG balance	$3,000
	Work In process
	Opening Balance	20000	Finsihed Goods Inv	$141,170
	Raw material Inventory	$38,000
	Wages payable	$75,000
	Factory Overhead	$37,500
	Ending balance	$29,330
	Cost of good sold
	Finished Goods Inventory	$155,250
	End bal	155250
		Finished Goods inventory
	Debit	Amt	Credit	Amt
	Beg bal	115000	Cost of good sold	155250
	WIP	$141,170
	end bal	$100,920
		Factory overhead control
	Raw Material control	500	Work in Process	$37,500
	Wages payable (200*20)+6000	10000
	Cash	28000
	end bal	$1,000
ans 2
Trading statement
	Job 70	Job 73	Job 75	Total
Sales	$50,000	90000	$45,000.0	$185,000
Less: cost of good sold	40000	75000	$40,250.0	$155,250
Gross profit	$10,000	$15,000	$4,750	$29,750
If any doubt please comment