Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.

Each knitter has a knitting machine that is used about 2/3 of the knitter's time, the rest of the knitter's time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.

The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.

Required:1. Review the data in the Predetermined Factory Overhead Rate

The rate used to apply factory overhead costs to the goods manufactured. The rate is determined by dividing the budgeted overhead cost by the estimated activity usage at the beginning of the fiscal period.

panel, and compute the predetermined factory overhead rate for POGP Company.2. On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition

The form or electronic transmission used by a manufacturing department to authorize materials issuances from the storeroom.

panel.A. Journalize the entry to record the addition of the materials to Work in Process.*B. On the Job Cost Sheets

An account in the work in process subsidiary ledger in which the costs charged to a particular job order are recorded.

panel, add the materials to the Job Cost Sheet for Job 83.3. On December 15, review the source documents on the Time Tickets

The form on which the amount of time spent by each employee and the labor cost incurred for each individual job, or for factory overhead, are recorded.

panel.A. Journalize the entry to record the addition of direct labor to Work in Process for the period December 1 through December 15.*B. Journalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15.*C. On the Job Cost Sheets panel, add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 62 for the period December 1 through December 15.4. On December 21, Job 62 is completed. Review the Job Cost Sheets panel and your journal entries. Journalize the entry to move the associated costs to the Finished Goods account.*5. On December 22, 75 of the 100 sweaters from Job 62 are sold on account for $125 each. Journalize the following transactions:*A. The entry to record the sale.B. The entry to record the transfer of costs from Finished Goods to Cost of Goods Sold.6. On December 31, the last work day of the year for the knitters, review the source documents on the Time Tickets panel.A. Journalize the entry to record the addition of direct labor to Work in Process for the period December 16 through December 31.*B. Journalize the entry to record the addition of factory overhead to Work in Process for the period December 16 through December 31.*C. On the Job Cost Sheets panel, add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 83 for the period December 16 through December 31.7. On December 31, journalize the following transactions.* Note that expenses (B), (C), and (D) were paid in cash.A. One month's depreciation on equipmentB. One month's payroll for all employeesC. One month's rent of $1,500D. One month's utilities of $1,2758. On December 31, prepare the journal entry to dispose of the balance in the Factory Overhead account.*9. What are the balances in the following accounts as of December 31?A.MaterialsB.Work in ProcessC.Finished GoodsD.Factory OverheadE.Cost of Goods Sold*Refer to the Chart of Accounts for exact wording of account titles.

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Chart of Accounts

CHART OF ACCOUNTSPOGP CompanyGeneral LedgerASSETS110Cash112Accounts Receivable117Supplies118Materials119Work in Process120Finished Goods125Equipment126Accumulated Depreciation-Equipment

LIABILITIES210Accounts Payable211Wages Payable

EQUITY310Common Stock311Retained Earnings312Dividends313Income Summary

REVENUE410Sales

EXPENSES510Cost of Goods Sold520Factory Overhead525Wages Expense

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Nov. 30 Trial Balance

POGP Company

UNADJUSTED TRIAL BALANCE

November 30, 20Y8

ACCOUNT TITLEDEBITCREDIT1

Cash

20,000.00

2

Accounts Receivable

1,000.00

3

Supplies

200.00

4

Materials

5,000.00

5

Work in Process

5,404.00

6

Equipment

12,000.00

7

Accumulated Depreciation-Equipment

825.00

8

Accounts Payable

150.00

9

Common Stock

10,000.00

10

Retained Earnings

12,000.00

11

Dividends

18,096.00

12

Sales

307,500.00

13

Cost of Goods Sold

255,040.00

14

Factory Overhead

15.00

15

Wages Expense

13,750.00

16

Totals

330,490.00

330,490.00

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Predetermined Factory Overhead Rate

Shaded cells have feedback.

Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base

A measure of activity that is related to changes in cost. Used in analyzing and classifying cost behavior. Activity bases are also used in the denominator in computing the predetermined factory overhead rate to assign overhead costs to cost objects.

for her predetermined factory overhead rate, rather than machine hours (MH).

Estimated Selected Amounts for the Year

Estimated depreciation on equipment$1,200.00EstimatedtotalOfficeManager/KnittingSupervisorwages$30,000.00Estimated office utilities$6,000.00Estimated factory utilities$4,800.00Estimated factory rent$18,000.00

Activity Base Data

Estimated number of DLH for the year5,000Estimated number of MH for the year3,500

Compute the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.

• selector 1$7.80 per DLH $7.80 per DLH
• $10.80 per DLH
• $11.14 per DLH
• $12.00 per DLH
• Another amount per DLH

Points:

1 / 1

Feedback

Check My Work

Review the definitions of items that are included in factory overhead for the computation of estimated total factory overhead costs.

Explanation

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Materials Requisition

MaterialsRequisitionDate:Dec.10Req. No. 12255Job No. 83DescriptionQty.IssuedUnit PriceAmountYarn type B700skeins$5.00$3,500Totalissued$3,500

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Time Tickets

Time TicketNo. 1255Name:SusanBlakeWorkDescription:Knitting/piecingDatesJob No.Hours WorkedUnit PriceAmount12/01-12/156265$15.00$975.0012/16-12/3183103$15.00$1,545.00Total Cost$2,520.00

Time TicketNo. 2274Name:JoshPorterWorkDescription:Knitting/piecingDatesJob No.Hours WorkedUnit PriceAmount12/01-12/156275$15.00$1,125.0012/16-12/318388$15.00$1,320.00Total Cost$2,445.00

Time TicketNo. 3923Name:MaryJonesWorkDescription:Knitting/piecingDatesJob No.Hours WorkedUnit PriceAmount12/01-12/156260$15.00$900.0012/16-12/3183109$15.00$1,635.00Total Cost$2,535.00

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Job Cost Sheets

Shaded cells have feedback.

Add the amounts in requirements 2(B), 3(C), and 6(C) to the appropriate areas of the following job cost sheets. If there is no amount or an amount is zero, enter "0". If required, round your answers to the nearest cent.

Job 62100 units:SweatersDirect MaterialsDirect LaborFactory OverheadTotalBalanceDec.1$5,000$300$104$5,404Dec. 15

Total Cost

Unit Cost

Points:

3 / 9

Feedback

Check My Work

Recall that the factory overhead is applied for this company using direct labor hours (DLH).

Explanation

Job 83200 units: Sweater vestsDirect MaterialsDirect LaborFactory OverheadTotal Job CostBalanceDec.1$0$0$0$0Dec. 10

Dec. 31

Total Cost

Points:

5 / 12

Feedback

Check My Work

Recall that the factory overhead is applied for this company using direct labor hours (DLH).

Explanation

none

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Journal

Shaded cells have feedback.

Journalize the entries in requirements 2 - 8. Refer to the Chart of Accounts for exact wording of account titles.

All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback.

PAGE 15

JOURNAL

ACCOUNTING EQUATION

Score: 16/287

DATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY1

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Solution

DATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY1

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Points:

3.12 / 56

Feedback

Explanation

none

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Final Question

Shaded cells have feedback.

What are the balances in the following accounts as of December31?

Materials

Work in Process

Finished Goods

Factory Overhead

Cost of Goods Sold

Points:

2 / 5

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