Question
G-Force Woodcraft manufactures customized household furnishings. The company uses a perpetual inventory system and has a highly labour intensive production process, so it assigns manufacturing
G-Force Woodcraft manufactures customized household furnishings. The company uses a perpetual inventory system and has a highly labour intensive production process, so it assigns manufacturing overhead based on direct labour cost. G-Force expects to incur $2,205,000 of manufacturing overhead costs and estimated direct labour costs of $3,150,000 during 2016. At the end of December 2018, G-Force reported work in process inventory (Job 551) of $93,000. The following events occurred during January 2019.
i) Purchased materials on account, $392,000
ii) Incurred manufacturing wages of $400,000
iii) Requisitioned direct materials and used direct labour in manufacturing
___Job ___Direct Materials ___Direct Labour
Job 551 ____$70,200________ $61,200
Job 552 _____97,500 ________115,600
Job 553 _____105,300________78,200
Job 554 _____ 117,000_______ 85,000
iv) Issued indirect materials to production, $30,000
v) Charged indirect manufacturing wages to production, $60,000
vi) Other manufacturing overhead costs incurred on units 551 to 554 amounted to $134,000
vii) Allocated overheads to jobs at the predetermined rate
viii)Units completed: 551, 552 & 554 ix) Sold units 551 & 554 (billed customers at a margin of 33% on sales)
Required:
(a) Compute G-Forces predetermined manufacturing overhead rate for 2019 and Calculate the total manufacturing costs for each job.
(b) Using the total figures, record the above transactions in the general journal.
(d) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account, clearly showing the balance before closing the account. State the journal entries necessary to dispose of the variance. Assume that the manufacturing overhead variance is immaterial.
(e) What is the balance in the Cost of Goods Sold account after the adjustment and Compute G-Forcers gross profit earned on the jobs, after adjusting for the manufacturing overhead variance
(g) Post the appropriate entries to Work in Process Inventory account & determine the account balance on January 31
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