Job costing, ethics.

Joseph Underwood joined Anderson Enterprises as controller in October

2016. Anderson Enterprises manufactures and installs home greenhouses. The company uses a

normal-costing system with two direct-cost pools, direct materials and direct manufacturing labor,

and one indirect-cost pool, manufacturing overhead. In 2016, manufacturing overhead was

allocated to jobs at 150% of direct manufacturing labor cost. At the end of 2016, an immaterial

amount of under allocated overhead was closed out to cost of goods sold, and the company showed

a small loss.

Underwood is eager to impress his new employer, and he knows that in 2017, Andersons

upper management is under pressure to show a profit in a challenging competitive environment

because they are hoping to be acquired by a large private equity firm sometime in 2018. At the end

of 2016, Underwood decides to adjust the manufacturing overhead rate to 160% of direct labor

cost. He explains to the company president that, because overhead was under allocated in 2016,

this adjustment is necessary. Cost information for 2017 follows

Andersons revenue for 2017 was $5,550,000, and the companys selling and administrative

expenses were $2,720,000

3. Insert the given information into T-accounts that you setup in your excel spreadsheet. Use

your borders function to set up your T-account lines in good form. Calculate, post, and

label all information or entries within your T-accounts. Use the following accounts and

any others deemed necessary.

a.Direct materials control, 12/31/2017

b.Manufacturing overhead allocated, 2017

4. Calculate the amount of under- or over allocated manufacturing overhead. Show your

calculation on your spreadsheet.

5.Calculate (show your work on your spreadsheet) Andersons net operating income under the

following:

a.Under- or over allocated manufacturing overhead is written off to cost of goods sold.

b.Post your closing entries to your T accounts and show all of your account balance totals.

6. Recreate (by copying) all of your T-accounts as they were before you posted the closing

entries in number 5 above. In other words, set up the accounts as they were before you

closed out the difference in your Manufacturing OH Control and Manufacturing OH

Allocated with the offset going to the Cost of Goods Sold account. You are now going to use

the proration method to close out your difference in Manufacturing OH Control and

Manufacturing OH Allocated.

a.Under- or over allocated manufacturing overhead is prorated based on the ending balances

in work in process, finished goods, and cost of goods sold. Prepare a proration schedule

like we did in class and then post your closing entries to your T-accounts. You will be

allocating to Work-in-Process, Finished Goods, and Cost of Goods Sold. You should

calculate the amounts to post and your ending balances within your schedule. Your

balances in your prorated T-accounts should agree with those in your proration schedule.

I HAVE THE WORK DONE UP UNTIL QUESTION 5B, SO I JUST NEED HELP AFTER THAT POINT.

Thank you for any help you may be able to provide.

Direct materials control, 1/1/2017 Direct materials purchased, 2017 Direct materials added to production, 2017 Work in process control, 1/1/2017 Direct manufacturing labor, 2017 Cost of goods manufactured, 2017 Finished goods control, 1/1/2017 Finished goods control, 12/31/2017 Manufacturing overhead costs, 2017 25,000 650,000 630,000 280,000 880,000 2,900,000 320,000 290,000 1,300,000 Direct materials control, 1/1/2017 Direct materials purchased, 2017 Direct materials added to production, 2017 Work in process control, 1/1/2017 Direct manufacturing labor, 2017 Cost of goods manufactured, 2017 Finished goods control, 1/1/2017 Finished goods control, 12/31/2017 Manufacturing overhead costs, 2017 25,000 650,000 630,000 280,000 880,000 2,900,000 320,000 290,000 1,300,000