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, 2048 Account Title Credit Cash Accounts Receivable Supplies Debit 20,000 1,000 200 5,000 5,404 12,000 Materials Work in Process Equipment Accumulated Depreciation-Equipment Accounts Payable Common Stock Retained Earnings 825 150 10,000 12,000 Retained Earnings Dividends Sales Cost of Goods Sold Factory Overhead Wages Expense 12,000 18,096 307,500 255,040 15 13,750 330,490 330,490 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 overhead 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 $30,000 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. $6.60 per DLH Date: Dec. 10 Materials Requisition Reg. No. 12255 Description Yarn type B Job No. 83 Qty. Issued Unit Price 700 skeins $5 Total issued Amount $3,500 $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 $15 $975 12/16-12/31 83103 1,545 Total Cost $2,520 62 15 Time Ticket No. 2274 Name: Josh Porter Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 $15 $1,125 12/16-12/31 83 151,320 Total Cost $2,445 Time Ticket No. 3923 Name: Mary Jones Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount Time Ticket No. 3923 Name: Mary Jones Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 60 $15 $900 12/16-12/31 83 10915 1,635 Total Cost $2,535 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: Sweaters Direct Materials Direct Labor Factory Overhead Total Balance Dec. 1 $5,000 $300 $104 $5,404 Dec. 15 0 3,000 1,248 6,040 x Total Cost $ 5,000 $ 3,300 $ 1,664 * $ 11,444 X Unit Cost s 11,444 x Job 83 200 units: Direct Materials $0 Sweater vests Direct Labor $0 Total Job Cost Factory Overhead $0 Balance Dec. 1 Job 83 200 units: Sweater vests Direct Materials Direct Labor 3 Balance Dec. 1 Dec. 10 Dec. 31 Total Cost ,500 0 3,500 0 4,500 4,500 Factory Overhead $0 0 1,872 x $ 4,560 x Total Job Cost $0 3,500 10,340 x $12,560 x $ $ 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 3,500 Materials 3,500 On December 15, review the Time Ticket tables to journalize the entry to record the addition of direct labor to Work in Process for the period December 1 through December 15. If an amount box does not require an entry, leave it blank. Dec. 15 Work in Process 3,000 Wages Payable 3,000 Feedback Check My Work Correct On December 15, review the Time Ticket tables to journalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15. If an amount box does not require an entry, leave it blank. Dec. 15 Work in Process V 1,560 x Factory Overhead V 2,040 X Feedback Check My Work Partially correct On December 21, Job 62 is completed. Review the Job Cost Sheets and your journal entries. Journalize the entry to move the associated costs to the finished goods account. If an amount box does not require an entry, leave it blank. Dec. 21 Finished Goods 10,324 x 0 Work in Process N 9,604 X On December 22, 75 of the 100 sweaters from Job 52 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. If an amount box does not require an entry, leave it blank. Dec. 22 Accounts Receivable 9,375 9,375 Sales 9,375 Dec. 22 Cost of Goods Sold Finished Goods O O Feedback Check My Work Partially correct On December 31, the last work day of the year for the knitters, review the Time Ticket tables to journalize the entry to record the addition of direct labor to Work in Process for the period December 16 through December 31. If an amount box does not require an entry, leave it blank. Dec. 31 Work in Process Wages Payable Feedback On December 31, the last work day of the year for the knitters, review the Time Ticket tables to journalize the entry to record the addition of factory overhead to Work in Process for the period December 16 through December 31. If an amount box does not require an entry, leave it blank. Dec. 31 Work in Process Factory Overhead Feedback Check My Work Partially correct On December 31, journalize the following transactions. Note that expenses (b), (c), and (d) were paid in cash. a. One month's depreciation on equipment b. One month's payroll for all employees c. One month's rent of $1,000 d. One month's factory utilities of $1,275 If an amount box does not require an entry, leave it blank. Dec. 31 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, 2048 Account Title Credit Cash Accounts Receivable Supplies Debit 20,000 1,000 200 5,000 5,404 12,000 Materials Work in Process Equipment Accumulated Depreciation-Equipment Accounts Payable Common Stock Retained Earnings 825 150 10,000 12,000 Retained Earnings Dividends Sales Cost of Goods Sold Factory Overhead Wages Expense 12,000 18,096 307,500 255,040 15 13,750 330,490 330,490 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 overhead 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 $30,000 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. $6.60 per DLH Date: Dec. 10 Materials Requisition Reg. No. 12255 Description Yarn type B Job No. 83 Qty. Issued Unit Price 700 skeins $5 Total issued Amount $3,500 $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 $15 $975 12/16-12/31 83103 1,545 Total Cost $2,520 62 15 Time Ticket No. 2274 Name: Josh Porter Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 $15 $1,125 12/16-12/31 83 151,320 Total Cost $2,445 Time Ticket No. 3923 Name: Mary Jones Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount Time Ticket No. 3923 Name: Mary Jones Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 60 $15 $900 12/16-12/31 83 10915 1,635 Total Cost $2,535 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: Sweaters Direct Materials Direct Labor Factory Overhead Total Balance Dec. 1 $5,000 $300 $104 $5,404 Dec. 15 0 3,000 1,248 6,040 x Total Cost $ 5,000 $ 3,300 $ 1,664 * $ 11,444 X Unit Cost s 11,444 x Job 83 200 units: Direct Materials $0 Sweater vests Direct Labor $0 Total Job Cost Factory Overhead $0 Balance Dec. 1 Job 83 200 units: Sweater vests Direct Materials Direct Labor 3 Balance Dec. 1 Dec. 10 Dec. 31 Total Cost ,500 0 3,500 0 4,500 4,500 Factory Overhead $0 0 1,872 x $ 4,560 x Total Job Cost $0 3,500 10,340 x $12,560 x $ $ 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 3,500 Materials 3,500 On December 15, review the Time Ticket tables to journalize the entry to record the addition of direct labor to Work in Process for the period December 1 through December 15. If an amount box does not require an entry, leave it blank. Dec. 15 Work in Process 3,000 Wages Payable 3,000 Feedback Check My Work Correct On December 15, review the Time Ticket tables to journalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15. If an amount box does not require an entry, leave it blank. Dec. 15 Work in Process V 1,560 x Factory Overhead V 2,040 X Feedback Check My Work Partially correct On December 21, Job 62 is completed. Review the Job Cost Sheets and your journal entries. Journalize the entry to move the associated costs to the finished goods account. If an amount box does not require an entry, leave it blank. Dec. 21 Finished Goods 10,324 x 0 Work in Process N 9,604 X On December 22, 75 of the 100 sweaters from Job 52 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. If an amount box does not require an entry, leave it blank. Dec. 22 Accounts Receivable 9,375 9,375 Sales 9,375 Dec. 22 Cost of Goods Sold Finished Goods O O Feedback Check My Work Partially correct On December 31, the last work day of the year for the knitters, review the Time Ticket tables to journalize the entry to record the addition of direct labor to Work in Process for the period December 16 through December 31. If an amount box does not require an entry, leave it blank. Dec. 31 Work in Process Wages Payable Feedback On December 31, the last work day of the year for the knitters, review the Time Ticket tables to journalize the entry to record the addition of factory overhead to Work in Process for the period December 16 through December 31. If an amount box does not require an entry, leave it blank. Dec. 31 Work in Process Factory Overhead Feedback Check My Work Partially correct On December 31, journalize the following transactions. Note that expenses (b), (c), and (d) were paid in cash. a. One month's depreciation on equipment b. One month's payroll for all employees c. One month's rent of $1,000 d. One month's factory utilities of $1,275 If an amount box does not require an entry, leave it blank. Dec. 31