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Grass Mower Company manufacturers a variety of gasoline-powered mowers for discount hardware and department stores. The company uses a job cost system and treats each
Grass Mower Company manufacturers a variety of gasoline-powered mowers for discount hardware and department stores. The company uses a job cost system and treats each customer's order as a separate job. The primary components are purchased under long-term contracts that call for the direct delivery of raw materials to the production floor as needed. When a customer's order is received, a raw materials purchase order is electronically placed with the supplier. The purchase order specifies the scheduled date that production is to begin and the scheduled date production is to be completed. As a consequence, there are no raw materials inventories; raw materials are charged directly to Work-in-process upon receipt. Upon completion goods are shipped directly to customers rather than transferred to finished goods inventory. At the beginning of September the company had the following jobs in work-in-process inventories: Job 1 $14,000 Job 2 9,000 Job 3 8,000 Total $31,000 During September, the following activities took place: 1. Started jobs 4, 5,6, and 7. 2. Ordered and received the following raw materials for specified jobs: Total Job 2 $1,800 Job 3 1,000 Job 4 1,800 Job 5 1,700 Job 6 2,300 Job 7 3,000 Total $11,600 3. Incurred September manufacturing payroll: Direct Labor Job 1 $900 Job 2 2,200 Job 3 2,300 Job 4 1,400 Job 5 1,500 Job 6 3,000 Job 7 1,000 Total Direct Labor 12,300 Indirect Labor 3,000 4. Incurred additional manufacturing overhead costs for September: Manufacturing supplies purchased and used 2,300 Depreciation on factory fixed assets 1,500 Factory utilities 1,700 5. Applied manufacturing overhead using a predetermined rate based on predicted annual overhead and predicted annual direct labor cost as follows: Predicted Annual Overhead $105,000 Predicted Annual Direct Labor cost $150,000 6. Completed and shipped jobs 3 and 6. The following is what was charged to these customers: Job 3 19,000 Job 6 10,000 Total 29,000 7. Selling and Administrative costs incurred in September are the following: $2,000 Required: You need to use cell references to provide answers and calculations. 1. Calculate the predetermined overhead rate. 2. Complete the job cost sheets provided below: Job 1 Job 2 Job 3 Job 4 Job 5 Job 6 Job 7 Beginning Balance Current costs: Direct materials Direct Labor Applied overhead Total 3. Determine the ending Work-In-Process Inventory at the end of September and provide the Job number (s) along with cost of each job still in Work-in-Process at the end of September. 4. Determine the Cost of Goods Sold for September and provide the Job number(s) along with the cost of each job still in Cost of Goods Sold for September. 5. Prepare a statement of cost of goods manufactured for September below. Use Manufacturing Overhead applied in your statement. I have provided a variation of the Statement of COGM from the textbook, since the company does not have beginning or ending Materials. Grass Mower Company Statement of Cost of Goods Manufactured For Month ending September 30, 2022 Current manufacturing costs: Cost of material placed in production Direct Labor Manufacturing overhead Applied Work-in-process September 1, 2021 Total costs in process Work-in-process September 30, 2021 Cost of goods manufactured 6. Prepare an Income Statement for September below. The company does not close the over or underapplied overhead until the end of the year, so no adjustment is needed to Cost of Goods Sold. I have provided a variation of the Income Statement from the textbook, since the company does not have beginning or ending Finished Goods. Grass Mower Company Income Statement For Month ending September 30, 2022 Sales Cost of goods sold Gross Profit Selling and Administrative expenses Net income 7. Determine the underapplied or overapplied manufacturing for September. You need to provide numeric detail of the analysis of under or overapplied overhead. You must label under or overapplied. 8. Prepare a pie chart below showing the cost of those jobs that are in work-in-process at the end of September
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