Question

The Dougherty Furniture Company manufactures tables. In March, the two production departments had budgeted allocation bases of 5,000 machine-hours in Department 100 and 10,000 direct manufacturing labor-hours in Department 200. The budgeted manufacturing overheads for the month were $75,000 and $80,000, respectively. For Job A, the actual costs incurred in the two departments were as follows:

                                                                          Department 100      Department 200

    Direct materials purchased on account       $110,000                     $177,500

    Direct materials used                                         32,500                         13,500

    Direct manufacturing labor                                52,500                         53,500

    Indirect manufacturing labor                               8,000                            9,000

    Indirect materials used                                        1,500                            1,750

    Lease on equipment                                            2,250                            1,150

   

Job A incurred 800 machine-hours in Department 100 and 300 manufacturing labor-hours in Department 200. The company uses a budgeted overhead rate for applying overhead to production.

Required:

a.    Determine the budgeted manufacturing overhead rate for each department (department 100 and department 200).

b.    Prepare the necessary journal entries to summarize the March transactions for Department 100 only used on Job A (raw material purchases, raw materials used, direct labor incurred, overhead allocated, and actual overhead incurred). For example a journal entry can by typed as:

               Cash $10           

                         Sales $10      or debit cash $10/credit sales $10

Answer 1

Answer:

a.    Determine the budgeted manufacturing overhead rate for each department (department 100 and department 200).

	Department 100	Department 200
Budgeted Overhead Costs (given) (a)	75000	80,000
Budgeted Labor hours(given) (b)	5000	10,000
Cost per hour (a/b)	15	8

___________________________________________________________________________

b.    Prepare the necessary journal entries to summarize the March transactions for Department 100 only used on Job A

Description	Debit $	Credit $
Materials Control Department 100	110,000
Accounts Payable Control		110,000
Work-in-Process Control Department 100	32500
Manufacturing Overhead Control Department 100	1500
Materials Control Department 100		34000
Work-in-Process Control Department 100	52500
Manufacturing Overhead Control Department 100	8000
Wages Payable Control		60500
Manufacturing Overhead Control Department 100	2250
Leaseholds Payable Control		2250
Work-in-Process Control Dept. 100 ($15 × 800 hrs)	12000
Manufacturing Overhead Allocated		12000