Question
Ashville Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis
Ashville Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, it was estimated that the company would work 200,000 machine-hours and incur $5,600,000 in manufacturing overhead costs.
The company spent the entire month of January working on a large order for 12,000 units of custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow:
Raw materials purchased on account, $452,000.
Raw materials requisitioned for production, $390,000 (90% direct materials and the rest indirect materials).
Labour cost incurred in the factory, $180,000 (60% indirect labour and the remaining direct labour).
Depreciation recorded on factory equipment, $175,000.
Other manufacturing overhead costs incurred, $92,000 (credit accounts payable).
Manufacturing overhead cost applied to production on the basis of 15,000 machine-hours actually worked during the month.
Completed job moved into finished goods warehouse on January 31 to await delivery to customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labour, and applied overhead.)
Required:
1. Prepare journal entries to record items (a) through (f) above (ignore item (g) for the moment).
Prepare T-accounts for manufacturing overhead and work in process. Post the relevant items from your journal entries to these T-accounts.
Prepare a journal entry for item
Dura Drums Ltd. (located in Jamaica) experiences wide variation in demand for the 500-litre steel drums it fabricates. The leakproof, rustproof steel drums have a variety of uses, from storing liquids and bulk materials to serving as makeshift musical instruments. The drums are made to order and are painted according to the customers specificationsoften in bright patterns and designs. The company is well known for the artwork that appears on its drums. Unit costs are computed on a quarterly basis by dividing each quarters manufacturing costs (materials, labour and overhead) by the quarters production in units. The companys estimated costs, by quarter, for the coming year are as follows:
|
| Quarter | |||||||||||
|
| First | Second | Third | Fourth | ||||||||
| Direct materials | $ | 360,000 |
| $ | 180,000 |
| $ | 90,000 |
| $ | 270,000 |
|
| Direct labour |
| 128,000 |
|
| 64,000 |
|
| 32,000 |
|
| 96,000 |
|
| Manufacturing overhead |
| 300,000 |
|
| 260,000 |
|
| 240,000 |
|
| 280,000 |
|
| Total manufacturing costs | $ | 788,000 |
| $ | 504,000 |
| $ | 362,000 |
| $ | 646,000 |
|
| Number of units to be produced |
| 40,000 |
|
| 20,000 |
|
| 10,000 |
|
| 30,000 |
|
| Estimated cost per unit | $ | 19.70 |
| $ | 25.20 |
| $ | 36.20 |
| $ | 21.53 |
|
|
| ||||||||||||
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Advanced Accounting
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
14th Edition
1260247821, 978-1260247824
