Waterways Continuing Problem 20 Waterways has two major publ

Waterways Continuing Problem 20

Waterways has two major public-park projects to provide with comprehensive irrigation in one of its service locations this month. Job J57 and Job K52 involve 15 acres of landscaped terrain which will require special-order sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December 2016.

Raw materials were requisitioned from the company’s inventory on December 2 for $5,061; on December 8 for $1,059; and on December 14 for $3,459. In each instance, two-thirds (2/3) of these materials were for J57 and the rest for K52.

Six time tickets were turned in for these two projects for a total amount of 18 hours of work. All the workers were paid $16.50 per hour. The time tickets were dated December 3, December 9, and December 15. On each of those days, 6 labor hours were spent on these jobs, two-thirds (2/3) for J57 and the rest for K52.

The predetermined overhead rate is based on machine hours. The expected machine hour use for the year is 2,112 hours, and the anticipated overhead costs are $840,576 for the year. The machines were used by workers on projects K52 and J57 on December 3, 9, and 15. Six machine hours were used for project K52 (2 each day), and 8.5 machine hours were used for project J57 (2.5 the first day and 3 each of the other days). Both of these special orders were completed on December 15, producing 237 sprinkler heads for J57 and 142 sprinkler heads for K52.

Additional job order activities during this period of time included:

a) Set up the job cost sheets for Job No. J57 and Job No. K52. Determine the total cost for each manufacturing special order for these jobs. (Round unit costs to 2 decimal places, e.g. 12.25.)

b) Journalize the activities from these job cost sheets in the general journal. Also journalize the other costs that occurred during this period of time. (Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)

c) Assuming that Manufacturing Overhead has a debit balance of $3,600, determine whether overhead has been under/over applied and make the adjusting entry.

Dec.	1		Purchased raw materials from Durbin Supply Company on account for $53,200.
Dec.	2		Issued $40,000 of direct materials from the company’s inventory to jobs other than K52 and J57 and $3,000 of indirect materials.
Dec.	12		Paid Waterways’ factory salaries and wages in the amount of $65,000.
Dec.	13		Paid the factory’s water bill of $9,000.
Dec.	18		Transferred $50,000 of costs from other completed jobs to finished goods.
Dec.	21		Paid the factory’s electric bill of $12,000 for Waterways’ factory.
Dec.	31		Made adjusting entries for the factory that included accrued property taxes of $12,000, prepaid insurance of $8,800, and accumulated depreciation on equipment of $16,000.

Journalize the activities from these job cost sheets in the general joumal. Also journalize the other costs that occurred during this period of time. (Credit account titles are automaticaly indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit (To assign materias to jobs J57 & K52) 12/2 (To assign materials to jobs and overhead) (To assign labor to jobs J57 & K52)

Solution

Ans a in $ Job J57 Direct Material (5061+1059+3459)*2/3 6386 Direct Labor (18*16.5*2/3) 198 Manufacturing overhead (8.5*398) 3383 Total cost 9967 Job K52 Direct Material (5061+1059+3459)*1/3 3193 Direct Labor (18*16.5*1/3) 99 Manufacturing overhead (6*398) 2388 Total cost 5680 Predetermined overhead rate 398 840576/2112 b) Date Accounts Title Dr Cr 1-Dec Raw Material Inventory $53,200 Accounts Payabke $53,200 2-Dec Work In process $40,000 Raw Material Inventory $40,000 (for other than job J57 and K52) 2-Dec Work In process $5,061 Raw Material Inventory $5,061 (to assign material to Job J57 and K52) 3-Dec Work In process Inventory (6*16.5) 99 Wages payable 99 (to assign labor to Job J57 and K52) 3-Dec Work In process 1791 Manufacturing Overhead (398*4.5) 1791 8-Dec Work In process $1,059 Raw Material Inventory $1,059 (to assign material to Job J57 and K52) 9-Dec Work In process Inventory (6*16.5) 99 Wages payable 99 (to assign labor to Job J57 and K52) 9-Dec Work In process 1990 Manufacturing Overhead (398*5) 1990 12-Dec Factory Labor $65,000 Wages payable $65,000 13-Dec manufacturing overhead $9,000 Cash $9,000 14-Dec Work In process Inventory $3,459 Raw Material Inventory $3,459 (to assign material to Job J57 and K52) 15-Dec Work In process Inventory (6*16.5) 99 Wages payable 99 (to assign labor to Job J57 and K52) 15-Dec Work In process Inventory 1990 Manufacturing Overhead (398*5) 1990 18-Dec Finished Good inventory 50000 Work In process Inventory 50000 18-Dec Finished Good inventory 15647 Work In process Inventory 15647 (9967+5680) 21-Dec manufacturing overhead $9,000 Cash $9,000 31-Dec manufacturing overhead 36800 Accured property Taxes payable 12000 Prepaid Insurance 8800 Accumulated depreciation-Equipment 16000 ans c When Manufacturing overhead has debit balance this means its is underapplied by $3600 as actual overheaf is more than applied overhead