Mountain Manufacturing Company produces custom stamped metal parts for a variety of customers in Western Canada. During January, the company had two jobs in process. Job A was an order for 1,200 stamped parts and was started in December. Job A had $12,000 of manufacturing costs already accumulated on January 1. Job B was an order for 1,000 stamped parts and was started in January. The company used a job-order costing system. Total manufacturing overhead for the year was estimated to be $576,000. Mountain Manufacturing uses direct labour-hours as the allocation base to establish its predetermined overhead rate. A total of 19,200 direct labour-hours are expected to be worked during the year. On January 1, the start of the company’s fiscal year, inventory account balances were as follows: Raw Materials $ 15,000 Work in Process $ 12,000 Finished Goods $ 10,000 During the month of January, the following transactions were completed: Raw materials were purchased for $30,000. Raw materials were requisitioned for use in production in the amount of $35,000. Of this amount, $25,000 was related to manufacturing ($5,000 for Job A and $20,000 for Job B) and the rest were indirect materials. In January, $32,000 of direct labour ($7,000 for Job A and $25,000 for Job B). In addition, $2,000 of indirect labour costs were incurred. In January, the company incurred the following general factory costs: Utilities expense of $8,000, rent on factory equipment of $8,000, and insurance costs of $1,900. The company recognized $10,000 in depreciation on factory equipment. The company applied manufacturing overhead to Job A and Job B. A total of 350 direct labour-hours were spent completing Job A and 1,250 direct labour-hours were recorded for Job B. Administrative salaries of $30,000 were paid in January. Selling expenses totalled $6,000 in January. Job A was completed in January. The completed cost of Job A according to the job cost sheet was $34,500. Job B remains in process at the end of January. Sales of all 1,200 units in Job A were recorded on account in the amount of $48,300 in January. Required: 1. Prepare journal entries to record the transactions for January. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 2. Prepare T-accounts. Determine ending balances in the inventory accounts and in the Manufacturing Overhead account. 3. Prepare a schedule of cost of goods manufactured. 4a. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 4b. Determine the adjusted Cost of Goods Sold. 5. Prepare an income statement for the month of January.
1)
Journal Entries: | Debit | Credit | ||
1 | Raw Material Inventory | $30,000 | ||
cash | $30,000 | |||
(Raw material purchased) | ||||
2 | Work in Process-Job A | $5,000 | ||
Work in Process-Job B | $20,000 | |||
Raw Material Inventory | $25,000 | |||
(Record Direct material used) | ||||
3 | Manufacturing Overhead | $10,000 | ||
Raw Material Inventory | $10,000 | |||
(Record indirect material used) | ||||
4 | Work in Progress- Job A | $7,000 | ||
Work in Progress- Job B | $25,000 | |||
Cash | $32,000 | |||
(Record direct labour used) | ||||
5 | Manufacturing Overhead | $2,000 | ||
Cash | $2,000 | |||
(Record indirect labour used) | ||||
6 | Manufacturing Overhead | $17,900 | ||
Cash | $17,900 | |||
(Record Utilities exp $8000, rent on factory equipment $8000 | ||||
and insurance cost $1900) | ||||
7 | Manufacturing Overhead | $10,000 | ||
Accumulated Depreciation-Factory Equipment | $10,000 | |||
(Depreciation expense on factory equipment) | ||||
8 | Work in Progress- Job A | $10,500 | ||
Work in Progress- Job B | $37,500 | |||
Manufacturing Overhead | $48,000 | |||
(Record overhead applied) | ||||
Working: Calculation of overhead | ||||
Total Manufacturing Overhead | $576,000 | |||
Total Direct labour hours | 19200 | |||
Therefore Manufacturing overhead per hour | ||||
=$576000/19200 | ||||
=$30 per labour hour | ||||
Job -A spend 350 Direct labour hour | ||||
so, we could charge Overhead of $10500 (350 hours * $30) | ||||
Job-B spend 1250 Direct labour hours | ||||
so, we could charge Overhead of $37500 (1250 hours * $30) | ||||
9 | Adminsitrative Salaries | 30000 | ||
Cash | 30000 | |||
10 | Selling Expenses | $6,000 | ||
cash | $6,000 | |||
(Salary expense recorded) | ||||
11 | Finished Goods Inventory | $34,500 | ||
work in process- Job A | $34,500 | |||
(Record Completion of Job A) | ||||
12 | Accounts Receivable | $48,300 | ||
Sale | $48,300 | |||
(Record sale of Job-A for $48300 on account) | ||||
13 | Cost of Goods Sold | $34,500 | ||
Finished Goods Inventory | $34,500 | |||
(Record total cost of Job-A now sold) | ||||
Mountain Manufacturing Company produces custom stamped metal parts for a variety of customers in Western Canada. During...
Mountain Manufacturing Company produces custom stamped metal parts for a variety of customers in Western Canada. During January, the company had two jobs in process. Job A was an order for 1,200 stamped parts and was started in December. Job A had $12,000 of manufacturing costs already accumulated on January 1. Job B was an order for 1,000 stamped parts and was started in January. The company used a job-order costing system. Total manufacturing overhead for the year was estimated...
Mountain Manufacturing Company produces custom stamped metal parts for a variety of customers in Western Canada. During January, the company had two jobs in process. Job A was an order for 1,200 stamped parts and was started in December. Job A had $12,000 of manufacturing costs already accumulated on January 1. Job B was an order for 1,000 stamped parts and was started in January. The company used a job-order costing system. Total manufacturing overhead for the year was estimated...
Need help with checking Q1-4 and finishing Q5... Thanks Problem 5-30 Comprehensive Problem (LO3, LO4, LOS, LO7) Mountain Manufacturing Company produces custom stamped metal parts for a variety of customers in Western Canada. During January, the company had two jobs in process. Job A was an order for 1,200 stamped parts and was started in December. Job Ahad $12,000 of manufacturing costs already accumulated on January 1. Job B was an order for 1,000 stamped parts and was started in...
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,800,000 in manufacturing overhead cost at an activity level of 240,000 machine-hours. The company spent the entire month of January working on a large order of 16,000 custom-made machined parts. The company had no work...
Dillon Products manufactures various machined parts to customer specifications. The company uses a job order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,800,000 in manufacturing overhead cost at an activity level of 240,000 machine hours. The company spent the entire month of January working on a large order for 16,000 custom-made machined parts. The company had...
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,262,400 in manufacturing overhead cost at an activity level of 576,000 machine-hours. The company spent the entire month of January working on a large order for 12,100 custom-made machined parts. The company had no work...
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,247,600 in manufacturing overhead cost at an activity level of 574,000 machine-hours. The company spent the entire month of January working on a large order for 12,000 custom-made machined parts. The company had no work...
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,192,500 in manufacturing overhead cost at an activity level of 559,000 machine-hours. The company spent the entire month of January working on a large order for 12,200 custom-made machined parts. The company had no work...
Check m Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,230,000 in manufacturing overhead cost at an activity level of 564,000 machine-hours. The company spent the entire month of January working on a large order for 12,500 custom-made machined parts. The company had...
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,245,000 in manufacturing overhead cost at an activity level of 566,000 machine-hours. The company spent the entire month of January working on a large order for 12,600 custom-made machined parts. The company had no work...