Assignment # 2

Question 1:

Panda Corporation builds custom playgrounds for various customers including schools and municipal governments. The company uses a normal job costing system and has chosen direct labour hours as the application base when applying manufacturing overhead. At the beginning of 2020, upper-level management met and determined that the budgeted amount of MOH for the upcoming year was $1,729,000. They also estimated that the total number of direct labour hours that will be needed this year would be 133,000 hours. The following data relates to activities that occurred in the month of May:

1. A total of $450,000 of raw materials were purchased on account.
2. A total of $580,000 of raw materials were requisitioned from the purchasing department, 80% were used directly in production and the remainder were indirect materials.
3. Total labour hours worked for the month of May was 11,000 hours of which 80% were directly used in production, 15% were used indirectly in the production process and the remaining 5% were paid to administrative staff. All production staff are paid $15 per hour whereas administrative staff are paid $22 per hour.
4. MOH for the month was applied to production
5. Depreciation of $80,000 was recorded for the month, 75% of the depreciation was for factory equipment and the remaining 25% was for office equipment located in the accounting department.
6. Production orders costing $920,000 were completed during May and transferred to finished goods
7. Production orders that had cost $860,000 to manufacture were shipped to customers during the month of May. These goods were sold for 30% above cost. All sales are on account.

Required:

1. Prepare journal entries to record the above transactions

Question 2:

Nomad Incorporated uses normal job order costing and has chosen machine hours as the application base for applying overhead into production. At the start of the fiscal period, it was estimated that the Nomads total manufacturing overhead costs for the upcoming year would amount to $672,000 and the forecasted number of machine yours required for the year would be 42,000. During the year the company incurred actual manufacturing overhead cost of $630,000 and 43,000 machine hours were used in production.

Required:

1. Determine if the MOH was overapplied or underapplied for the year just ended.
2. Prepare the appropriate journal entry that is needed to deal with the over/under applied MOH.

Question 3:

Dupont Corporation manufactures paint that goes through four processing stages before it can be packaged and sold in 4 litre cans. Below is the information relating to the first department, Mixing, for the month of June:

Production data:

On June 1, there were 30,000 units in process that were 80% completed as to materials, 40% completed as to labour and 20% completed as to manufacturing overhead.

During the month of June, 220,000 units were started in production and 200,000 units were transferred out of the Mixing department and were sent to the next department.

The units that remained in the Mixing department at the end of June were 60% completed as to materials, 20% completed as to labour and 10% completed as to manufacturing overhead.

Cost data: Materials Labour MOH

Work in process inventory, June 1: $4,000 $4,800 $12,000

Costs added during June: 320,000 48,000 140,000

Required:

Prepare the cost of production report for the Mixing Department for the month of June. Dupont uses the weighted average cost method in all its departments.