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 knitters time, the rest of the knitters 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 panel, and calculate 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 panel.

A.	Journalize the entry to record the addition of the materials to Work in Process.*
B.	On the Job Cost Sheets panel, add the materials to the Job Cost Sheet for Job 83.

3.

On December 15, 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 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 months depreciation on equipment
B.	One months payroll for all employees
C.	One months rent of $2,000
D.	One months utilities of $1,275

8.

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.	Materials
B.	Work in Process
C.	Finished Goods
D.	Factory Overhead
E.	Cost of Goods Sold
	* Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

CHART OF ACCOUNTS

POGP Company

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
130	Supplies
140	Materials
150	Work in Process
160	Finished Goods
170	Equipment
175	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
220	Wages Payable

	EQUITY
310	Common Stock
320	Retained Earnings
330	Dividends
340	Income Summary

	REVENUE
410	Sales

	EXPENSES
500	Cost of Goods Sold
510	Factory Overhead
520	Wages Expense

Nov. 30 Trial Balance

POGP Company

UNADJUSTED TRIAL BALANCE

November 30, 20--

	ACCOUNT TITLE	DEBIT	CREDIT
1	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	Finished Goods
7	Equipment	12,000.00
8	Accumulated Depreciation-Equipment		825.00
9	Accounts Payable		150.00
10	Wages Payable
11	Common Stock		10,000.00
12	Retained Earnings		12,000.00
13	Dividends	18,096.00
14	Income Summary
15	Sales		307,500.00
16	Cost of Goods Sold	255,040.00
17	Factory Overhead		15.00
18	Wages Expense	13,750.00
19	Totals	330,490.00	330,490.00

Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).

Estimated Selected Amounts for the Year
Estimated depreciation on equipment	$1,200.00
Estimated total Office Manager/Knitting Supervisor wages	$42,000.00
Estimated office utilities	$4,000.00
Estimated factory utilities	$4,800.00
Estimated factory rent	$24,000.00

Activity Base Data
Estimated number of DLH for the year	5,000
Estimated number of MH for the year	3,500

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

Materials Requisition			Date: Dec. 10
Req. No. 12255	Job No. 83
Description	Qty. Issued	Unit Price	Amount
Yarn type B	700 skeins	$5.00	$3,500
		Total issued	$3,500

Time Ticket	No. 1255	Name:	Susan Blake
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	65	$15.00	$975.00
12/16-12/31	83	103	$15.00	$1,545.00
			Total Cost	$2,520.00

Time Ticket	No. 2274	Name:	Josh Porter
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	75	$15.00	$1,125.00
12/16-12/31	83	88	$15.00	$1,320.00
			Total Cost	$2,445.00

Time Ticket	No. 3923	Name:	Mary Jones
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	60	$15.00	$900.00
12/16-12/31	83	109	$15.00	$1,635.00
			Total Cost	$2,535.00

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

Job 62	100 units:	Sweaters
	Direct Materials	Direct Labor	Factory Overhead	Total
Balance Dec. 1	$5,000	$300	$104	$5,404
Dec. 15
Total Cost
			Unit Cost

ob 83200 units:Sweater vestsDirect MaterialsDirect LaborFactory OverheadTotal Job CostBalance Dec. 1$0$0$0$0Dec. 10Dec. 31Total Cost

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

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JOURNAL

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What are the balances in the following accounts as of December 31?

Materials
Work in Process
Finished Goods
Factory Overhead
Cost of Goods Sold