CUCK HERE TO SAVE YOUR WORK 11 1 Targon Inc, manufactures lawn equipment and uses a job costing system. At the beginning of 2019, the following estimates were provided for overhead costs and direct labour hours (the cost driver/allocation base): 2. Overhead costs Direct labour hours $2,500,000 500,000 3 4 5 6 7 The following are account balances as of November 30, 2019 and job information for December 2019: Jobs Balance, Nov. 30 December Costs Added Direct Direct Overhead materials labour $210,000 $62,000 ? $6,000 $26,000 ? $181,000 $182,000 ? Direct labour hours used in December 6,000 2,500 18,000 $700,000 $500,000 1105 1106 1201 1 2 $161,000 Actual manufacturing overhead costs incurred during December were: These costs will be paid for in January, 2020. Job 1105 was started in November then completed, billed and delivered to the customer in December. Job 1106 was started in November and completed in December. Job 1201 was started in December but was still incomplete as of December 31, 2019 1. Calculate the company's predetermined overhead rate (POR) for the year. (2 marks) 3 POR - 2. Calculate the amount of overhead applied to each job in December. (3 marks) 1105 1106 1201 Applied overhead 3. Prepare the following journal entries for December. Debits must be recorded before credits (8 marks): a. To record the direct materials used in production. Debit Credit b. To record direct labour used in production. Debit Credit Sheet1 46 C. To record the actual manufacturing overhead costs incurred. 48 Debit Credit 49 50 51 54 52 d. To record the overhead applied to production. 53 Debit Credit 55 56 57 4. Calculate the balances at December 31st for Work in Process, Finished Goods and Cost of Goods Sold before adjusting for over- or under-applied overhead. (3 marks) 58 Total 59 60 61 62 63 Work in process Finished goods Cost of goods sold 64 Total 60 61 Work in process 62 Finished goods 63 Cost of goods sold 64 65 5. Calculate the over or under-applied overhead for December. (2 marks) 66 67 68 69 70 71 6. If the company followed IAS 2 for closing over or under-applied overhead, describe how the over or under-applied overhead would be treated. (2 marks) based on Part 5 above 72 73 74 75 CUCK HERE TO SAVE YOUR WORK 11 1 Targon Inc, manufactures lawn equipment and uses a job costing system. At the beginning of 2019, the following estimates were provided for overhead costs and direct labour hours (the cost driver/allocation base): 2. Overhead costs Direct labour hours $2,500,000 500,000 3 4 5 6 7 The following are account balances as of November 30, 2019 and job information for December 2019: Jobs Balance, Nov. 30 December Costs Added Direct Direct Overhead materials labour $210,000 $62,000 ? $6,000 $26,000 ? $181,000 $182,000 ? Direct labour hours used in December 6,000 2,500 18,000 $700,000 $500,000 1105 1106 1201 1 2 $161,000 Actual manufacturing overhead costs incurred during December were: These costs will be paid for in January, 2020. Job 1105 was started in November then completed, billed and delivered to the customer in December. Job 1106 was started in November and completed in December. Job 1201 was started in December but was still incomplete as of December 31, 2019 1. Calculate the company's predetermined overhead rate (POR) for the year. (2 marks) 3 POR - 2. Calculate the amount of overhead applied to each job in December. (3 marks) 1105 1106 1201 Applied overhead 3. Prepare the following journal entries for December. Debits must be recorded before credits (8 marks): a. To record the direct materials used in production. Debit Credit b. To record direct labour used in production. Debit Credit Sheet1 46 C. To record the actual manufacturing overhead costs incurred. 48 Debit Credit 49 50 51 54 52 d. To record the overhead applied to production. 53 Debit Credit 55 56 57 4. Calculate the balances at December 31st for Work in Process, Finished Goods and Cost of Goods Sold before adjusting for over- or under-applied overhead. (3 marks) 58 Total 59 60 61 62 63 Work in process Finished goods Cost of goods sold 64 Total 60 61 Work in process 62 Finished goods 63 Cost of goods sold 64 65 5. Calculate the over or under-applied overhead for December. (2 marks) 66 67 68 69 70 71 6. If the company followed IAS 2 for closing over or under-applied overhead, describe how the over or under-applied overhead would be treated. (2 marks) based on Part 5 above 72 73 74 75
