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Divine Homes manufactures prefabricated chalets in Colorado. The company uses a perpetual inventory system and a job costing system in which each chalet is a
Divine Homes manufactures prefabricated chalets in Colorado. The company uses a perpetual inventory system and a job costing system in which each chalet is a job. The following events occurred during May:
- Purchased materials on account, $480,000.
- Incurred total manufacturing wages of $116,000, which included both direct labour and indirect labour. Used direct labour in manufacturing as follows:
Direct Labour | |
---|---|
Chalet 13 ...................... | $14,300 |
Chalet 14 ...................... | 28,700 |
Chalet 15 ...................... | 19,100 |
Chalet 16 ...................... | 21,500 |
- Requisitioned direct materials in manufacturing as follows:
Direct Materials | |
---|---|
Chalet 13 ...................... | $41,900 |
Chalet 14 ...................... | 56,900 |
Chalet 15 ...................... | 62,400 |
Chalet 16 ...................... | 66,800 |
- Depreciation of manufacturing equipment used on different chalets, $6,700.
- Other overhead costs incurred on Chalets 13-16:
Equipment rentals paid in cash ...................... | $10,800 |
Prepaid plant insurance expired ...................... | 3,000 |
- Allocated overhead to jobs at the predetermined rate of 60% of direct labour cost.
- Chalets completed: 13, 15, and 16.
- Chalets sold on account: #13 for $97,000; #16 for $149,000.
Requirements
- Record the events in the general journal.
- Post the appropriate entries to the T-accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero.
- Add the costs of the unfinished chalet, and show that this total amount equals the ending balance in the work in process inventory account.
- Summarize the job cost of the completed chalet that has not yet been sold and show that this equals the ending balance in finished goods inventory.
- Compute gross profit on each chalet that was sold. What costs must gross profit cover for Divine Homes?
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