Question
Everytime I think I understand I start off wrong and get beyond lost. Widmer Watercrafts predetermined overhead rate is 200% of direct labor. Information on
Everytime I think I understand I start off wrong and get beyond lost.
Widmer Watercrafts predetermined overhead rate is 200% of direct labor. Information on the companys production activities during May follows.
- Purchased raw materials on credit, $200,000.
- Materials requisitions record use of the following materials for the month.
| Job 136 | $ | 48,500 | |
| Job 137 | 33,500 | ||
| Job 138 | 20,200 | ||
| Job 139 | 23,200 | ||
| Job 140 | 6,400 | ||
| Total direct materials | 131,800 | ||
| Indirect materials | 20,000 | ||
| Total materials used | $ | 151,800 | |
- Paid $15,750 cash to a computer consultant to reprogram factory equipment.
- Time tickets record use of the following labor for the month. These wages were paid in cash.
| Job 136 | $ | 12,000 | |
| Job 137 | 10,600 | ||
| Job 138 | 37,900 | ||
| Job 139 | 39,000 | ||
| Job 140 | 3,000 | ||
| Total direct labor | 102,500 | ||
| Indirect labor | 26,500 | ||
| Total | $ | 129,000 | |
- Applied overhead to Jobs 136, 138, and 139.
- Transferred Jobs 136, 138, and 139 to Finished Goods.
- Sold Jobs 136 and 138 on credit at a total price of $535,000.
- The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).
| Depreciation of factory building | $ | 69,000 | |
| Depreciation of factory equipment | 37,000 | ||
| Expired factory insurance | 12,000 | ||
| Accrued property taxes payable | 36,000 | ||
Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
| No | Transaction | General Journal | Debit | Credit |
|---|---|---|---|---|
| 1 | a. | Raw materials inventory | 200,000 | |
| Accounts payable | 200,000 | |||
| 2 | b. | Work in process inventory | ||
| Factory overhead | ||||
| Raw materials inventory | ||||
| 3 | c. | Factory overhead | 15,750 | |
| Cash | 15,750 | |||
| 4 | d. | Work in process inventory | 102,500 | |
| Factory overhead | 26,500 | |||
| Cash | 128,500 | |||
| 5 | e. | Work in process inventory | ||
| Factory overhead | ||||
| 6 | f. | Finished goods inventory | ||
| Work in process inventory | ||||
| 7 | g(1). | Accounts receivable | 60,500 | |
| Sales | 60,500 | |||
| 8 | g(2). | Cost of goods sold | ||
| Finished goods inventory | ||||
| 9 | h. | Factory overhead | ||
| Accum. depreciationFactory building | ||||
| Accum. depreciationFactory equipment | ||||
| Prepaid insurance | ||||
| Property taxes payable | ||||
| 10 | i. | Work in process inventory | ||
| Factory overhead |
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Fundamental Accounting Principles
Authors: John Wild, Ken Shaw, Barbara Chiappetta
22nd edition
9781259566905, 978-0-07-76328, 77862279, 1259566900, 0-07-763289-3, 978-0077862275
