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Chapter 16 Checkpoint Problem #2 which uses a job-order costing system, had the following account balances on January Nelson Company, of the current year $2.400 $22.450 $65,700 Raw Materials Work in Process Finished Goods The Work-in-Process Inventory consisted of three jobs: 1211 55,120; #1212 58,470; and 91213 $8,860 The Finished Goods Inventory consisted oftwo jobs, #1207, $31,900 and #1209 S33.800. Nelson Company uses a normal costing system with an overhead rate based oo machine bours. The following budgeted information was available for the current year: Annual overhead costs $107,800 and machime hours 2,450. During the current year, the following transactions took place: a. Raw materials costing $50,000 were parchased on account b. Total factory labor charges accrued were $147,400 c. A summary of material requisitions and time tickets appeared as follows Time Tickets Direct Machine Hours Used Material Labor Job No. Requisitions Labor HoursCost 9,000 10,000 1,900 1,100 9.350 8,730 4.750 360 400 150 990 310 250 840 210 1214 1215 1216 680 225 140 510 560 24.750 7.750 8,940 sub-total $40,230 8,500 21,000 4,500 112,300 34,900 Indirect Total $48,730 d. Other factory costs include $24,500 of depreciation on factory equipment, $9,500 of expired factory insurance, S12,000 of accrued property taxes and $18,300 of miscellancous factory costs paid in cash. e. Job Nos. 1211, 1212, 1213, 1214, 1215, and 1218 were completed f Job Nos. 1207, 1209, 1211, 1213, and 1218 were sold for a total of $300,000 cash. REQUIRED A. What is the pre-determined annual overhcad rate? B. Complete the attached cost flow diagram and job order cost sheets. Be sure to enter the beginning balances of the inventory accounts and be sure to compute ending balances for all accounts C. Prepare ALL necessary journal entries for the current year in the attached general journal. D. Verify the ending balance of the work-in-process and finished goods inventories by reconciling the balances to the appropriate job cost sheets. E. Prepare the manufacturing statement and a partial income statement (through gross profit) for the year.
1. Predetermined overhead rate = $44 per machine hour
Working:
Estimated total overhead = $107,400
Estimated total machine hours = 2,450
Predetermined overhead rate = 107,400 / 2,450 = $44 per machine hour
B.
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C.
D.
E.
| Raw Material Inventory | | Work-in-process Inventory | | Finished Goods Inventory |
| |
| Event | Debit | Event | Credit | | Event | Debit | Event | Credit | | Event | Debit | Event | Credit |
| Beg. | 2400 | c | 48730 | | Beg. | 22450 | Event | 250650 | | Beg. | 65700 | f.2 | 165120 |
| a | 50000 | | | | c.1 | 40230 | | | | Event | 250650 | | |
| | | | | c.2 | 112500 | | | | | | | |
| | | | | d.2 | 112640 | | | | | | | |
| 52400 | | 48730 | | | 287820 | | 250650 | | | 316350 | | 165120 |
| End.Bal. | 3670 | | | | End.Bal. | 37170 | | | | End.Bal. | 151230 | | |
| | | | | | | | | | | | | |
| Cost of goods sold expense | | Factory Payroll | | Factory Overhead |
| |
| Event | Debit | Event | Credit | | Event | Debit | Event | Credit | | Event | Debit | Event | Credit |
| f.2 | 165120 | f.3 | 4940 | | b | 147400 | c.2 | 147400 | | c.1 | 8500 | d.2 | 112640 |
| | | | | | | | | | c.2 | 34900 | | |
| 165120 | | 4940 | | | | | | | d.1 | 64300 | | |
| Bal. | 160180 | | | | | | | | | f.3 | 4940 | | |
| | | | | | | | | | | 112640 | | 112640 |
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