Question
Bandway Company manufactures brass musical instruments for use by high school students. The company uses a normal costing system, in which manufacturing overhead is applied
Bandway Company manufactures brass musical instruments for use by high school students. The company uses a normal costing system, in which manufacturing overhead is applied on the basis of direct-labor hours. The companys budget for the current year included the following predictions. |
Budgeted total manufacturing overhead | $ | 446,600 |
Budgeted total direct-labor hours (based on practical capacity) | 20,300 | |
During October, the firm worked on the following two production jobs: |
Job number T79, consisting of 76 trombones |
Job number C41, consisting of 110 cornets |
The events of October are described as follows: |
a. | One thousand square feet of rolled brass sheet metal was purchased on account for $4,000. |
b. | Three hundred pounds of brass tubing was purchased on account for $3,000. |
c. | The following requisitions were submitted on October 5: |
Requisition number 112: 250 square feet of brass sheet metal at $5 per square foot (for Job number T79) | |
Requisition number 113: 1,000 pounds of brass tubing, at $10 per pound (for Job number C41) | |
Requisition number 114: 10 gallons of valve lubricant, at $10 per gallon | |
All brass used in production is treated as direct material. Valve lubricant is an indirect material. | |
d. | An analysis of labor time cards revealed the following labor usage for October. |
Direct labor: Job number T79, 800 hours at $20 per hour | |
Direct labor: Job number C41, 900 hours at $20 per hour | |
Indirect labor: General factory cleanup, $4,000 | |
Indirect labor: Factory supervisory salaries, $9,000 | |
e. | Depreciation of the factory building and equipment during October amounted to $12,000. |
f. | Rent paid in cash for warehouse space used during October was $1,100. |
g. | Utility costs incurred during October amounted to $2,100. The invoices for these costs were received, but the bills were not paid in October. |
h. | October property taxes on the factory were paid in cash, $2,200. |
i. | The insurance cost covering factory operations for the month of October was $3,100. The insurance policy had been prepaid. |
j. | The costs of salaries and fringe benefits for sales and administrative personnel paid in cash during October amounted to $6,000. |
k. | Depreciation on administrative office equipment and space amounted to $3,000. |
l. | Other selling and administrative expenses paid in cash during October amounted to $1,000. |
m. | Job number T79 was completed on October 20. |
n. | Half of the trombones in Job number T79 were sold on account during October for $700 each. |
The October 1 balances in selected accounts are as follows: |
Cash | $ 9,000 | ||||||||||||||||||||||||
Accounts Receivable | 21,000 | ||||||||||||||||||||||||
Prepaid Insurance | 5,000 | ||||||||||||||||||||||||
Raw-Material Inventory | 149,000 | ||||||||||||||||||||||||
Manufacturing Supplies Inventory | 400 | ||||||||||||||||||||||||
Work-in-Process Inventory | 91,000 | ||||||||||||||||||||||||
Finished-Goods Inventory | 220,000 | ||||||||||||||||||||||||
Accumulated Depreciation: Buildings and Equipment | 101,000 | ||||||||||||||||||||||||
Accounts Payable | 11,000 | ||||||||||||||||||||||||
Wages Payable | 8,000 | ||||||||||||||||||||||||
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