Scholastic Brass Corporation manufactures brass musical inst

Scholastic Brass Corporation manufactures brass musical instruments for use by high school students. The company uses a normal costing system, in which manufacturing overhead is applied on the basis of direct-labor hours. The company’s budget for the current year included the following predictions.

Budgeted total manufacturing overhead ..........................................................................................................$426,300

Budgeted total direct-labor hours (based on practical capacity) .....................................................................20,300

During March, the firm worked on the following two production jobs: Job number T81, consisting of 76 trombones Job number C40, consisting of 110 cornetsThe events of March are described as follows:

a. One thousand square feet of rolled brass sheet metal were purchased on account for $5,000.

b. Four hundred pounds of brass tubing were purchased on account for $4,000.

c. The following requisitions were submitted on March 5: Direct labor: Job number T81, 800 hours at $20 per hour Direct labor: Job number C40, 900 hours at $20 per hour Indirect labor: General factory cleanup, $4,000 Indirect labor: Factory supervisory salaries, $9,000 Requisition number 112: 250 square feet of brass sheet metal at $5 per square foot (for job number T81) Requisition number 113: 1,000 pounds of brass tubing, at $10 per pound (for job number C40) Requisition number 114: 10 gallons of valve lubricant, at $10 per gallonAll brass used in production is treated as direct material. Valve lubricant is an indirect material.

d. An analysis of labor time cards revealed the following labor usage for March.

Direct labor: Job number T81, 800 hours at $20 per hour

Direct labor: Job number C40, 900 hours at $20 per hour Indirect labor:

General factory cleanup, $4,000 Indirect labor:

Factory supervisory salaries, $9,000

e. Depreciation of the factory building and equipment during March amounted to $12,000.

f. Rent paid in cash for warehouse space used during March was $1,200.

g. Utility costs incurred during March amounted to $2,100. The invoices for these costs were received, but the bills were not paid in March.

h. March property taxes on the factory were paid in cash, $2,400.

i. The insurance cost covering factory operations for the month of March was $3,100. The insurance policy had been prepaid.

j. The costs of salaries and fringe benefits for sales and administrative personnel paid in cash during March amounted to $8,000.

k. Depreciation on administrative office equipment and space amounted to $4,000.

l. Other selling and administrative expenses paid in cash during March amounted to $1,000.

m. Job number T81 was completed on March 20.

n. Half of the trombones in job number T81 were sold on account during March for $700 each.

The March 1 balances in selected accounts are as follows:

Cash ...................................................................................................................................................................$?? 10,000

Accounts Receivable .........................................................................................................................................21,000

Prepaid Insurance .............................................................................................................................................5,000

Raw-Material Inventory .....................................................................................................................................149,000

Manufacturing Supplies Inventory ....................................................................................................................500

Work-in-Process Inventory ................................................................................................................................91,000

Finished-Goods Inventory .................................................................................................................................220,000

Accumulated Depreciation: Buildings and Equipment .....................................................................................102,000

Accounts Payable ..............................................................................................................................................13,000

Wages Payable ..................................................................................................................................................8,000

Required:

1. Calculate the company’s predetermined overhead rate for the year.

2. Prepare journal entries to record the events of March.

3. Set up T-accounts, and post the journal entries made in requirement (2).

4. Calculate the overapplied or underapplied overhead for March. Prepare a journal entry to close this balance into Cost of Goods Sold.

5. Prepare a schedule of cost of goods manufactured for March.

6. Prepare a schedule of cost of goods sold for March.

7. Prepare an income statement for March.

Solution

ans 1 Predetermined rate 21 426300/20300 Job cost sheet T81 C40 Total Direct Materials 1,250 10,000 11,250 (250*5) (1000*10) Direct Labor D 16,000 18,000 34,000 (800*20) (900*20) Applied overhead 16800 18900 35,700 (800*21) (900*21) Total costs added in April T 34,050 46,900 Total costs (April 30) B+T $34,050 $46,900 Status on April 30 April 30 cost included in: Transa Accounst Title Dr Cr a Raw Material Inventory 5000 Accounts payable 5000 b) Raw Material Inventory 4000 Accounts payable 4000 c) Work in Process Inventory 11,250 Factory Overhead   (10*10) 100 Raw Material Inventory 11,350 d) Work in Process Inventory 34,000 Factory Overhead (4000+9000) 13000 Wages payable 47,000 Work in Process Inventory 35,700 Factory Overhead   35,700 e Factory Overhead 12,000 Accumulated depreciation-Factory equipment 12,000 f Factory Overhead 1200 Cash 1200 g Factory Overhead 2,100 Accounts payable 2,100 h Factory Overhead 2400 Cash 2400 i Factory Overhead 3100 Prepaid Insurance 3100 j Salaries expenses 8000 Cash 8000 k Depreciation expenses $4,000 Accumulated depreciation-Office equipment $4,000 l Other selling and administrative expenses 1000 Cash 1000 m Finished Goods Inventory (the beginning bal of T81+34050) $34,050 Work in Process Inventory $34,050 n Accounts Receivable 26600 Sales (76*1/2*700) 26600 Cost of good sold (34050*1/2)+(beg bal of T81*1/2) 17025 Finished Goods Inventory 17025 T account Factory Overhead c) 100 Applied 35,700 d) 13000 e) 12,000 f) 1200 g) 2,100 h) 2,100 i) 3100 Ending balance 2,100 Overapplied by $2100 Dr Cr ans 4 Factory overhead 2100 Cost of good sold 2100 As work in process inventory balance detail not given hence total job cost cant be calculated. Apart from that all entries are made. If any doubt please comment