During February, the following transactions were completed and reported by Bixby Prod¬

ucts, Inc.:

a. Raw materials purchased on account, $43,500.

b. Materials issued to production to fill job-order requisitions, $35,000; supplies, $12,200.

c. Payroll for the month: direct labor, $60,000; indirect labor, $20,000; administrative,

$18,000; sales, $9,000.

d. Depreciation on factory plant and equipment, $8,500.

e. Property tax accrued during the month, $450 (on factory).

f. Insurance expired with a credit to the prepaid account, $6,200.

g. Factory utilities, $6,200.

h. Advertising, $5,000.

i. Depreciation on office equipment, $1,500; on sales vehicles, $650.

j. Legal fees for preparation of lease agreements, $750.

k. Overhead is charged to production at a rate of $6 per DLH. Records show 8,000 direct labor hours were worked during the month.

l. Cost of jobs completed during the month, $135,000.

The company also reported the following beginning balances in its inventory accounts:

Required:
1. Prepare journal entries to record the transactions occurring in February.
2. Prepare T-accoimts for Raw Materials, Overhead, Work in Process, and Finished Goods.
Post all relevant entries to these accounts.
3. Prepare a statement of cost of goods manufactured.
4. If the overhead variance is all allocated to Cost of Goods Sold, by how much will Cost of Goods Sold decrease or increase?

Transcribed Image Text:

Raw Materials Work in Process Finished Goods $ 5,000 30,000 60,000