Allenton Company is a manufacturing firm that uses joborder

Allenton Company is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 31,000 machine-hours and incur $248,000 in manufacturing overhead cost. The following transactions were recorded for the year:

a. Raw materials were purchased, $412,419.
b. Raw materials were requisitioned for use in production, $409,000 ($388,000 direct and $21,000 indirect).
c. The following employee costs were incurred: direct labor, $145,210; indirect labor, $61,356; and administrative salaries, $198,450.
d. Factory utility costs, $14,815.
e. Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities.
f. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 29,067 machine-hours (Hint: you need to compute a predetermined overhead rate to apply overhead).
g. The cost of goods manufactured for the year was $783,075.
h. Sales for the year totaled $1,107,000 and the costs on the job cost sheets of the goods that were sold totaled $768,990.

Required (4 Points): Prepare the appropriate journal entry for each of the items above.

Calculate Cost of Goods Sold (do not close the over- or under-applied Mfg. Overhead).

  Was the overhead underapplied or overapplied? By how much?

Raw materials Work in process Finished goods Beginning Balance $14,000 $27,000 $62,000 Ending Balance $22,000 $9,000 $77,000

Solution

Predetrmined overhead rate = 248000/31000 8 a Raw material inventory 412419              Accounts payable 412419 b Work in progress inventory 388000 Factory overheads 21000             Raw material inventory 409000 c Work in progress inventory 145210 Factory overheads 61356 Administrative and selling expense 198450             Wages and salaries payable 405016 d Factory overheads 14815             Cash 14815 e Factory overheads 114000 Administrative and selling expense 7000             Accumulated depreciation 121000 f Work in progress inventory 232536 (8*29067)             Factory overheads 232536 g Finished goods inventory 783075            Work in progress inventory 783075 h Accounts receivable 1107000            Sales revenue 1107000 Cost of goods sold 768990             Finished goods inventory 768990