PA25 Recording Manufacturing Costs and Analyzing Manufacturi

PA2-5 Recording Manufacturing Costs and Analyzing Manufacturing Overhead [LO 2-3, 2-4, 2-5] Christopher\'s Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs, Inventory balances at the beginning of 2018 falikra Raw Materials Inventory Work in Process Inwentory Finished Goods Inventory $16,800 5.800 21,400 The following transaction (a) Purchased materials on account for $26,600 s occurred during January ssued materials to production totaling $21,800. 90 percen ofwich was traced to specific jolbs and the remainder of which was reated as indirect material (e) Payroll costs totaling $18,200 were recorded as follows $11,000 for assembly workers 1,600 for factory supervision 2,300 for administrative personnel 3,300 for sales commissions (d) Recorded depreciation: $4,300 for machines, $B0O for the copier u e) Recorded $1.1 (f) Paid S6,000 in other factory costs in cash. (g) Applied manufacturing overheed at a rate of 200 percent of direct labor cost nsurance. Forty percent was ingurr used in the administrative office one; the job cost sheet for this job shows $2.300 for direct materials, $2.500 Sor direct labor, and $5,000 for applied overhead. Forty percent was insuranoe on the manufacturing facility, with the r emainder classified as an administrative expense. Sold jobs costing $50,800. The revenue earned on these jobs was S66040 Required: posting to the 1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts: (Post all amount s separacaly. Do not combineladd any d dollar amounts when a. Raw Materials Inventory b. Work in Process Inventory c. Finished Goods Inventory d, Cost of Goods Sold. e. Selling, General, and Administrative Expenses. f. Sales Revenue g. Other accounts (CashPayables, etc.). in Beg. Bal Beg. Bal Monday /292018 Type here to search

Solution

1. T-accounts

2.

Working:

Sales revenue = $66,040

Unadjusted cost of goods sold = $50,800

Unadjusted gross profit = $15,240

3.

Overhead applied $22,000

Overhead incurred $14,520

Overhead overapplied $7,480

4.

Unadjusted gros profit = $15,240

Adjustment for overapplied overhead = $ 7,480

Adjusted Gross Profit =$22,720

Christopher\'s Cushion Cabinet Company
Raw Material		Work-in-process
Event	Debit	Credit	Event		Event	Debit	Credit	Event
Beg.Bal.	16800	19620	b		Beg.Bal.	5800	48620	h
a	26600	2180	b		b	19620	9800	End.Bal.
		21600	End.Bal.		c	11000
					g	22000
	43400	43400				58420	58420
Beg.Bal.	21600				Beg.Bal.	9800
Finished goods		Manufacturing overhead
Event	Debit	Credit	Event		Event	Debit	Credit	Event
Beg.Bal.	21400	50800	i		b	2180	22000	g
h	48620	19220	End.Bal.		c	1600
					d	4300
					e	440
	70020	70020			f	6000
Beg.Bal.	19220
						14520	22000
Cost of goods sold		Selling,General and Admin.Overhead
Event	Debit	Credit	Event		Event	Debit	Credit	Event
i	50800				c	6600	8060	m
					d	800
					e	660
	50800	0				8060	8060
Sales Revenue		Other Acounts (Cash, Payables Etc.)
Event	Debit	Credit	Event		Event	Debit	Credit	Event
		66040	i				26600	a
							19200	c
							5100	d
	0	66040					1100	e
							6000	f
							58000
				58000	Beg.Bal.