Answered step by step
Verified Expert Solution
Question
1 Approved Answer
K.|Fine Chairs (KFC) Inc. manufactures fine handcrafted chairs made to customer specifications. The Company uses normal job order costing and the manufacturing overhead is applied
K.|Fine Chairs (KFC) Inc. manufactures fine handcrafted chairs made to customer specifications. The Company uses normal job order costing and the manufacturing overhead is applied on a basis of direct labour hours. Estimated manufacturing overhead for the year totalled $240,000. The firm employs 10 master carpenters who constitute all of the direct-labour force. Each of these employees is expected to work 2,000 hours during the year. The following events occurred during the month of May: a. KFC purchased 3,000 board meters of mahogany wood for $110 per board meter on account. b. A total of 500 board meters of mahogany were requisitioned for production at a cost of $110 per board meter. c. Four litres of glue were requisition for production. Each liter costs $15. d. Depreciation of $8,000 for KFC's building was recorded. Twenty percent of the building is occupied by selling and administrative staff while the rest is used for production activities. e. A utility bill totalling $680 was paid for. Seventy percent of the bill relates to manufacturing activities while the remaining thirty percent can be traced to selling and administrative activities. f. Carpenter employee timecards for the month show that 320 hours of labour were used in production. All carpenters are paid an hourly rate of $42.50 per hour. Manufacturing overhead was applied into production for the month of May. h. KFC also hires unskilled labourers who perform various tasks such as material handling and shop cleanup. Their wages for May amounted to $2,500. A customer's job for 10 chairs costing a total of $14,000 to manufacture was completed during the month. The 10 chairs were delivered to the client and they were billed $25,000 for the job. Under the terms of sale, the client is given 60 days to pay the bill. Required: a. Calculate the predetermined (budgeted) MOH rate of KFC. b. Prepare journal entries to record the transactions that occurred in May
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started