Assignment Question 3 Job costing, journal entries Cool Beat Sound (CBS) Ltd, which uses a job costing system, had two jobs in process at the start of the year job number 64 ($84 000) and job number 65 ($53 500) The following information is available The company applies manufacturing overhead on the basis of machine hours Budgeted overhead and machine activity for the year were anticipated to be $840 000 and 16 000 hours, respectively The company works on four jobs during the first quarter (1 January to 31 March) Direct materials used, direct labour incurred, and machine hours consumed were as follows Job numbers Direct material Direct labour Machine hours 64 $21 000 $35 000 1200 65 22 000 700 66 44 000 65 000 2000 67 15 000 8 800 500 Manufacturing overhead during the first quarter included depreciation ($34 000), indirect labour ($60 000), indirect materials used ($50 000) and other factory costs ($139 500) CBS Ltd completed job number 64 and 65 Job number 65 was sold on credit, producing a profit of $34 700 for the firm Required Describe the flow of costs through a product costing system What ledger accounts are involved, and how are they used (You might want to refer to Figure 2 7 p 42 in textbook) Determine the companys overhead rate Calculate the costs of each job as of 31 March Determine the ending balance of the Finish goods inventory account and Work in process account as of 31 March Prepare the journal entries for the first quarter recording the following (a) Issue of direct materials to production and the direct labour incurred (b) Manufacturing overhead incurred during the quarter (c) Application of manufacturing overhead to production (d) Completion of job numbers 64 and 65 (e) Sale of job number 65 When do under or overallocated overhead costs occur Briefly describe three alternative ways to dispose under or overallocated overhead costs Calculate the amount of under or overallocated overhead of the company for the first quarter Show the journal entry to write off this amount to Cost of goods sold

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 27, 2024

Assignment Question 3 Job costing, journal entries Cool Beat Sound (CBS) Ltd, which uses a job costing system, had two jobs in process at the

Assignment Question 3

Job costing, journal entries

Cool Beat Sound (CBS) Ltd, which uses a job costing system, had two jobs in process at the start of the year: job number 64 ($84 000) and job number 65 ($53 500). The following information is available:

The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and machine activity for the year were anticipated to be $840 000 and 16 000 hours, respectively.

The company works on four jobs during the first quarter (1 January to 31 March). Direct materials used, direct labour incurred, and machine hours consumed were as follows:

Job numbers	Direct material	Direct labour	Machine hours
64	$21 000	$35 000	1200
65	-	22 000	700
66	44 000	65 000	2000
67	15 000	8 800	500

Manufacturing overhead during the first quarter included depreciation ($34 000), indirect labour ($60 000), indirect materials used ($50 000) and other factory costs ($139 500).

CBS Ltd completed job number 64 and 65. Job number 65 was sold on credit, producing a profit of $34 700 for the firm.

Required:

Describe the flow of costs through a product costing system. What ledger accounts are involved, and how are they used? (You might want to refer to Figure 2-7 p.42 in textbook)
Determine the companys overhead rate. Calculate the costs of each job as of 31 March. Determine the ending balance of the Finish goods inventory account and Work in process account as of 31 March.
Prepare the journal entries for the first quarter recording the following: (a) Issue of direct materials to production and the direct labour incurred. (b) Manufacturing overhead incurred during the quarter. (c) Application of manufacturing overhead to production. (d) Completion of job numbers 64 and 65. (e) Sale of job number 65.
When do under- or overallocated overhead costs occur? Briefly describe three alternative ways to dispose under- or overallocated overhead costs. Calculate the amount of under- or overallocated overhead of the company for the first quarter. Show the journal entry to write off this amount to Cost of goods sold.