Question

P15-3A Case Inc. is a construction company specializing in custom patios. The patio constructed of concrete, brick, fiberglass, and lumber, depending upon customer preter ence. On June 1, 2017, the general ledger for Case Inc. contains the following data. Raw Materials Inventory $4,200 Manufacturing Overhead Applied Work in Process Inventory $5,540 Manufacturing Overhead Incurred $31,050 $32,640 Subsidiary data for Work in Process Inventory on June 1 are as follows. Cost Element Direct materials 00000 Direct labor Manufacturing overhead Job Cost Sheets Customer Job Rodgers Stevens $ 600 da $ 800 320 400 675 $1,320 $2,015 540 Linton $ 900 580 725 $2,205 During June, raw materials purchased on account were $4,900, and all wages were paid. Additional overhead costs consisted of depreciation on equipment $900 and miscel- laneous costs of $400 incurred on account. A summary of materials requisition slips and time tickets for June shows the following. Customer Job Rodgers Materials Requisition Slips $ 800 Koss 2,000 Stevens Linton Rodgers 500 1,300 300 4,900 1,500 $6,400 Time Tickets $ 850 800 360 1,200 390 3,600 1,200 $4,800 General use Overhead was charged to jobs at the same rate of $1.25 per dollar of direct labe The patios for customers Rodgers, Stevens, and Linton were completed during June and sold for a total of $18,900. Each customer paid in full. Instructions (a) Journalize the June transactions: (1) for purchase of raw materials, factory labore incurred, and manufacturing overhead costs incurred; (2) assignment of direct mata labor, and overhead to production, and (3) completion of jobs and sale of goods

Answer 1

P15-3A

(a)

Date	Account titles and explanation	Debit	Credit
1	Raw materials	$4900
	Account payable		$4900
	(To record purchase of raw materials on account)
	Factory labor	$4800
	Cash		$4800
	(To record factory labor costs paid)
	Manufacturing overhead (900+400)	$1300
	Accumulated depreciation- Equipment		$900
	Account payable		$400
	(To record manufacturing overhead costs incurred)
2	Work in process inventory	$4900
	Manufacturing overhead	$1500
	Raw materials inventory		$6400
	(To record direct materials assigned)
	Work in process inventory	$3600
	Manufacturing overhead	$1200
	Factory labor		$4800
	(To record factory labor assigned)
	Work in process inventory ($3600*1.25)	$4500
	Manufacturing overhead		$4500
	(To record manufacturing overhead assigned)
3	Finished goods inventory	$14740
	Work in process inventory		$14740
	(To record completion of jobs)
	Cash	$18900
	Sales revenue		$18900
	(To record sales of goods)
	Cost of goods sold	$14740
	Finished goods inventory		$14740
	(To record cost of goods sold)

Calculation of finished goods inventory= Direct materials+Direct labor+Manufacturing overhead

Rodgers= $(600+800+300)+(320+850+390)+(320+850+390)*1.25= $5210

Stevens= $(800+500)+(540+360)+(540+360)*1.25= $3325

Linton= $(900+1300)+(580+1200)+(580+1200)*1.25= $6205

Finished goods inventory= $5210+3325+6205= $14740

(b)

Work in process Inventory
6/1	Balance	$5540	June	Completed work	$14740
	Direct materials	4900
	Direct labor	3600
	Manufacturing overhead	4500
6/30	Balance	$3800

(c) Cost of Unfurnished Jobs: Koss- Direct materials $2000+Direct labor $800+Manufacturing overhead $1000 (800*$1.25)= $3800

(d)

CASE INC.
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2017
Work in process, June 1		$5540
Direct materials	4900
Direct labor	3600
Manufacturing overhead applied	4500
Total manufacturing costs		13000
Total cost of work in process		18540
Less: Work in inventory, June 30		(3800)
Cost of goods manufactured		$14740

P15-4A

(a) Predetermined overhead rate of Department D= Total manufacturing overhead/Total direct labor costs

= $1200000/1500000= 80% of direct labor cost

Predetermined overhead rate of Department E= Total manufacturing overhead/Total direct labor hours

= $1500000/125000= $12 per direct labor hour

Predetermined overhead rate of Department K= Total manufacturing overhead/Total machine hours

= $900000/120000= $7.5 per machine hour

(b) Calculation of Total manufacturing costs

Total manufacturing costs= Direct materials+Direct labor+Manufacturing overhead applied

Department D= $140000+120000+($120000*80%)= $356000

Department E= $126000+110000+(11000*$12)= $368000

Department K= $78000+37500+(10400*$7.5)= $193500

(c) Under or overapplied overhead= Actual manufacturing costs-Applied manufacturing costs

Department D= $99000-($120000*80%)= $3000 under applied

Department E= $124000-(11000*$12)= $8000 over applied

Department K= $79000-(10400*$7.5)= $1000 under applied