Mastery Problem: Job Order Costing Purl of Great Price Company 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. Nov. 30 Trial Balance POGP Company Trial Balance November 30, 2018 Account Title Cash Accounts Receivable Debit Credit 20,000 1,000 Supplies 200 Materials 5,000 Work in Process 5,404 Equipment 12,000 < Accumulated Depreciation-Equipment 825 Accounts Payable 150 Common Stock 10,000 Retained Earnings 12,000 Dividends 18,096 Sales 307,500 Cost of Goods Sold 255,040 Factory Overhead 15 Wages Expense 13,750 330,490 330,490 Predetermined Factory Overhead Rate Predetermined Factory Overhead Rate 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 overhea rate, rather than machine hours (MH). Estimated Selected Amounts for the Year Estimated depreciation on equipment $1,200 Estimated total Office Manager/Knitting Supervisor wages $42,000 Estimated office utilities $5,000 Estimated factory utilities $4,800 Estimated factory rent $12,000 Activity Base Data Estimated number of DLH for the year 5,000 Estimated number of MH for the year 3,500 Compute the predetermined factory overhead rate for the current year. $7.80 per DLH Feedback Check My Work Materials Requisition Req. No. 12255 Description Date: Dec. 10 Job No. 83 Qty. Issued Unit Price Amount Yarn type B 600 skeins $5 $3,000 Total issued $3,000 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 $20 $1,300 12/16-12/31 83 103 20 2,060 Total Cost $3,360 Time Ticket No. 2274 Name: Josh Porter Work Description: Knitting/piecing Dates 12/01-12/15 12/16-12/31 Job No. Hours Worked Unit Price Amount 62 75 $20 $1,500 83 33 88 20 1,760 Total Cost $3,260 Time Ticket No. 3923 Name: Mary Jones Work Description: Knitting/piecing Work Description: Knitting/piecing Job No. Hours Worked Unit Price Amount Dates 12/01-12/15 12/16-12/31 62 60 $20 $1,200 83 109 20 2,180 Total Cost $3,380 Job Cost Sheets On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition table to add the materials to the Job Cost Sheet for Job 83. On December 15, review the Time Ticket tables to 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. On December 31, the last work day of the year for the knitters, review Time Ticket tables to 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. 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: Direct Materials Sweaters Direct Labor Factory Overhead Total Balance Dec. 1 Dec. 15 Total Cost $5,000 0 5,000 $300 $104 $5,404 3,000 x 1,560 3,300 X 1,664 v Unit Cost Work Description: Knitting/piecing Job No. Hours Worked Unit Price Amount Dates 12/01-12/15 12/16-12/31 62 60 $20 $1,200 83 109 20 2,180 Total Cost $3,380 Job Cost Sheets On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition table to add the materials to the Job Cost Sheet for Job 83. On December 15, review the Time Ticket tables to 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. On December 31, the last work day of the year for the knitters, review Time Ticket tables to 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. 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: Direct Materials Sweaters Direct Labor Factory Overhead Total Balance Dec. 1 Dec. 15 Total Cost $5,000 0 5,000 $300 $104 $5,404 3,000 x 1,560 3,300 X 1,664 v Unit Cost Job 83 200 units: Sweater vests Direct Materials Direct Labor Factory Overhead Total Job Cost Balance Dec. 1 50 50 50 $0 Dec. 10 3,000 0 0 3,000 V Dec. 31 Total Cost 3,000 Feedback Check My Work Recall that the factory overhead is applied for this company using direct labor hours (DLH) Journal On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition table to journalize the entry to record the addition of the materials to Work in Process. If an amount box does not require an entry, leave it blank. Dec. 10 Work in Process Materials 3,000 3,000 Feedback Check My Wark