Chapter 16 Exercises eBook Job Order Costing for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 65% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $270,000 Take Off Airlines 80,000 Sleepy Tired Hotels 210,000 Tastee Beverages 115,000 Total $675,000 During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct Labor Media Purchases Vault Bank $190,000 $710,000 Take Off Airlines 85,000 625,000 Sleepy Tired Hotels 372,000 455,000 Tastee Beverages 421,000 340,000 Total $1,068,000 $2,130,000 At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. a. Journalize the summary entry to record the direct labor costs for the month. If an amount box does not require an entry, leave it blank. b. Journalize the summary entry to record the media purchases for the month. If an amount box does not require an entry, leave it blank. b. c. Journalize the summary entry to record the overhead applied for the month. If an amount box does not require an entry, leave it blank. C. d. Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines campaigns for the month. If an amount box does not require an entry, leave it blank. d.Entries for Factory Costs and Jobs Completed Collegiate Publishing Inc. began printing operations on March 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addit $8,200 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form: rials and labor charged directly to the jobs, $4,500 of indirect materials and Job 30 Direct materials $12,500 Direct labo 31,000 Factory overhead 7,750 Total 51,250 Job 302 Direct materials $18,750 Direct labo 42,200 Factory overhead 10,550 Tota $71,500 Job 303 Direct materials $9,940 Direct labor 16,500 Factory overhead Job 304 Direct materials $14,310 Direct labo 17,100 Factory overhead Journalize the summary entry to record each of the following operations for March (one entry for each operation): a. Direct and indirect materials used. If an amount box does not require an entry, leave it blank. b. Direct and indirect labor used. If an amount box does not require an entry, leave it blank. c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost). If an amount box does not require an entry, leave it blank. d. Completion of Jobs 301 and 302. If an amount box does not require an entry, leave it blank.Entries for Materials Kingsford Furnishings Company manufactures designer furniture. Kingsford Furnishings uses job order costing. Balances on April 1 from the materials ledger are as follows: Fabric $58,300 Polyester filling 30,000 Lumber 58,800 Glue 9,950 The materials purchased during April are summarized from the receiving reports as follows: Fabric $820,000 Polyester filling 315,000 Lumber 555,000 Glue 80,000 Materials were requisitioned to individual jobs as follows: Polyester Fabric Filling Lumber Glue Total Job 601 $190,000 $66,200 $118,500 $374,700 Job 602 365,000 152,100 219,300 736,400 Job 603 255,000 101,700 196,200 552,900 Factory overhead-indirect materials $83,600 83,600 Total $810,000 $320,000 $534,000 $83,600 $1,747,600 The glue is not a significant cost, so it is treated as indirect materials (factory overhead). a. Journalize the entry to record the purchase of materials in April. If an amount box does not require an entry, leave it blank. 3. b. Journalize the entry to record the requisition of materials in April. If an amount box does not require an entry, leave it blank. b. c. Determine the April 30 balances that would be shown in the materials ledger accounts. Polyester Fabric Filling Lumber Glue Balance, April 30Cost Flow Relationships The following information is available for the first year of operations of Idgie Inc., a manufacturer of fabricating equipment: Sales $13,150,000 Gross prot 6,000,000 Indirect labor 375,000 Indirect materials 175,000 Other factory overhead 820,000 Materials purchased 3,975,000 Total manufacturing costs for the period 8,110,000 Materials inventory, end of period 310,000 > Using this information, determine the following amounts: a. Cost of goods sold at: b. Direct materials cost $:] c. Direct labor cost $:] Transactions in Job Order CosLing Five selected transactions for the current month are indicated by letters in the following T accounts in a job order costing system: Materials (6) (b) Work in Process (3) (f) (C) (e) Wages Payable (C) (d) Finished Goods (f) I (9) Factory Overhead (b) (E) (d) Cost of Goods Sold {9) Describe each of the seven transactions. a. ' b. ' c. ' d. ' e. V f. ' Factory Overhead Rates, Entries, and Account Balance Eclipse Solar Company operates two factories. The company applies factory overhead to jobs on the basis of machine hours in Factory 1 and on the basis of direct labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows: Factory 1 Factory 2 Estimated factory overhead cost for scal year beginning August 1 $18,500,000 $44,000,000 Estimated direct labor hours for year 800,000 Estimated machine hours for year 1,250,000 Actual factory overhead costs for August $1,515,800 $3,606,300 Actual direct labor hours for August 64,500 Actual machine hours for August 105,000 a. Determine the factory overhead rate for Factory 1. Round your answer to two decimal places. $:] per machine hour b. Determine the factory overhead rate for Factory 2. $:] per direct labor hour c. Journalize the entries to apply factory overhead to production in each factory for August. If an amount box does not require an entry, leave it blank. Factory 1 V C] C] ' :1 :1 Factory2 ' C] C] ' :1 :1 d. Determine the balances of the factory overhead accounts for each factory as of August 31, and indicate whether the amounts represent overappiied factory overhead or underappiied factory overhead. Factory 1 $:] _' ' Factory 2 $:] _' '