Homework SourseDillon Products manufactures various machined parts to custo
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead costs 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 $4,327,500 in manufacturing overhead cost at an activity level of 577,000 machine-hours.
The company spent the entire month of January working on a large order for 9,000 custom made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow:
Manufacturing overhead cost was applied to production on the basis of 40,640 machine-hours actually worked during the month.
The completed job was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead.)
Prepare journal entries to record items (a) through (f) above. [Ignore item (g) for the moment.] (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field. Do not round intermediate calculations.)
Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T-accounts. (Do not round intermediate calculations.)
Compute the unit product cost that will appear on the job cost sheet. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
| Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead costs 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 $4,327,500 in manufacturing overhead cost at an activity level of 577,000 machine-hours. |
| The company spent the entire month of January working on a large order for 9,000 custom made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: |
Solution
Answer 1 & 3. Journal Entry Date Particulars Dr. Amt. Cr. Amt. a. Raw Material 317,000.00 Accounts Payable 317,000.00 (To record the raw material purchased) b. Work in Process 209,600.00 Manufacturing Overhead 52,400.00 Raw Materials 262,000.00 (To record the raw material issued) c. Work in Process 51,000.00 Manufacturing Overhead 102,000.00 Wages & Salaries Payable 153,000.00 (To record the Labor used) d. Manufacturing Expenses 63,600.00 Accumulated Dep. - Factory Equip. 63,600.00 (To record the depreciation on plant) e Manufacturing Overhead 85,500.00 Accounts Payable 85,500.00 (To record the other MOH) f Work in Process 304,800.00 Manufacturing Overhead 304,800.00 (To record the manufacturing overhead applied) Predetermined Overhead Rate = $4,327,500 (Overhead) / 577,000 Mach Hrs Predetermined Overhead Rate = $7.50 per mach hr Overhead Applied = 40,640 Mach Hrs X $7.50 = $304,800 g Finished Goods Dr. 565,400.00 To Work in Process 565,400.00 Answer 2. Raw Material Work in Process Beg. Bal. - 262,000.00 b. Beg. Bal. - 565,400.00 g a. 317,000.00 b. 209,600.00 c. 51,000.00 f 304,800.00 End. Bal. 55,000.00 End. Bal. - Finished Goods Manufacturing Overhead Beg. Bal. - Beg. Bal. - 304,800.00 f g 565,400.00 b. 52,400.00 c. 102,000.00 d. 63,600.00 e 85,500.00 Overhead Overapplied 1,300.00 End. Bal. 565,400.00 End. Bal. - Answer 4. Cost per Unit = $565,400 / 9,000 Mach. Parts Cost per Unit = $64 per Unit
