53. (Comprehensive; job cost sheet) The Big Plains Construction Company builds bridges. For the months of October

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53. (Comprehensive; job cost sheet) The Big Plains Construction Company builds bridges. For the months of October and November 2001, the firm worked exclusively on a bridge spanning the Niobrara River in northern Nebraska. The firm is organized into two departments. The Precast Department builds structural elements of the bridges in temporary plants located near the construction sites.

The Construction Department operates at the bridge site and assembles the precast structural elements. Estimated costs for the Niobrara River Bridge for the Precast Department were $150,000 for direct labor, $310,500 for direct material, and

$110,000 for overhead. For the Construction Department, estimated costs for the Niobrara River Bridge were $160,000 for direct labor, $50,000 for direct material, and $160,000 for overhead. Overhead is applied on the last day of each month.

Overhead application rates for the Precast and Construction Departments are $18 per machine hour and 100 percent of direct labor cost, respectively.

TRANSACTIONS FOR OCTOBER Oct. 1 $150,000 of material was purchased (on account) for the Precast Department to begin building structural elements. All of the material issued to production, $130,000, was considered direct.

5 Utilities were installed at the bridge site at a total cost of $15,000.

8 Rent was paid for the temporary construction site housing the Precast Department,

$4,000.

15 Bridge support pillars were completed by the Precast Department and transferred to the construction site.

20 $30,000 of machine rental expense was incurred by the Construction Department for clearing the bridge site and digging foundations for bridge supports.

24 Additional material costing $285,000 was purchased on account.

31 The company paid the following bills for the Precast Department: utilities, $7,000;

direct labor, $45,000; insurance, $6,220; and supervision and other indirect labor costs, $7,900. Departmental depreciation was recorded, $15,200. The company also paid bills for the Construction Department: utilities, $2,300; direct labor,$16,300;

indirect labor, $5,700; and insurance, $1,900. Departmental depreciation was recorded on equipment, $8,750.

31 A check was issued to pay for the material purchased on October 1 and October 24.

31 Overhead was applied to production in each department; 2,000 machine hours were worked in the Precast Department in October.

TRANSACTIONS FOR NOVEMBER Nov. 1 Additional structural elements were transferred from the Precast Department to the construction site. The Construction Department incurred a cash cost of $5,000 to rent a crane.

4 $200,000 of material was issued to the Precast Department. Of this amount, $165,000 was considered direct.

8 Rent of $4,000 was paid in cash for the temporary site occupied by the Precast Department.

15 $85,000 of material was issued to the Construction Department. Of this amount,

$40,000 was considered direct.

18 Additional structural elements were transferred from the Precast Department to the construction site.

24 The final batch of structural elements was transferred from the Precast Department to the construction site.

29 The bridge was completed.

30 The company paid final bills for the month in the Precast Department: utilities $15,000;

direct labor, $115,000; insurance, $9,350; and supervision and other indirect labor costs, $14,500. Depreciation was recorded, $15,200. The company also paid bills for the Construction Department: utilities, $4,900; direct labor, $134,300; indirect labor,

$15,200; and insurance, $5,400. Depreciation was recorded on equipment, $18,350.

30 Overhead was applied in each department. The Precast Department recorded 3,950 machine hours in November.

30 The company billed the state of Nebraska for the completed bridge at the contract price of $1,550,000.

a. Prepare all necessary journal entries for the preceding transactions. For purposes of this problem, it is not necessary to transfer direct material and direct labor from one department into the other.

b. Post all entries to T-accounts.

c. Prepare a job order cost sheet, which includes estimated costs, for the construction of the bridge.

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Cost Accounting Traditions And Innovations

ISBN: 9780324180909

5th Edition

Authors: Jesse T. Barfield, Cecily A. Raiborn, Michael R. Kinney

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