Page of 6 ZOOM For all requirements: Show all work - this can be done by using Excel formulas and cell references or by showing formulas used Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrigate farms, parks, commercial projects, and private lawns. It has a centrally located factory in a U.S. city that manufactures the products it markets to retail outlets across the nation. It also maintains a division that performs installation and warranty servicing in six metropolitan areas. The mission of Waterways is to manufacture quality parts that can be used for effective irrigation projects that also conserve water. By that effort, the company hopes to satisfy its customers, perform rapid and responsible service, and serve the community and the employees who represent them in each community. The company has been growing rapidly, so management is considering new ideas to help the company continue its growth and maintain the high quality of its products Waterways has two major public park projects to provide with comprehensive irrigation in one of its service locations this month. Job 157 and Job K52 involve 15 acres of landscaped terrain which will require special-order sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December, . The predetermined overhead rate is based on machine hours. The expected machine hour use for the year is 2,112 hours, and the anticipated overhead costs are $840,576 for the year. The machines were used by workers on projects KS2 and 157 during December. Six machine hours were used for project K52, and 8.5 machine hours were used for project J57. Both of these special orders were completed on December 15, producing 237 sprinkler heads for J57 and 142 sprinkler heads for K52. Additional job order activities during this period of time included: LI T Dec. 1 Purchased raw materials from Durbin Supply Company on account for $53,200. 1 Issued $40,000 of direct materials from the company's inventory to jobs other than K52 and J57 and $3,000 of Dec. 2 indirect materials. Dec. 5 Requisitioned raw materials from the company's inventory to Job K52 - $3,193 and J57 $6,386 Dec 12 Incurred factory salaries and wages in the amount of $65,000. Dec. 12 Based on time tickets, labor related to Job K52 - $99 and J57 - $198 Dec. 13 Paid the factory's water bill of $9,000. Dec. 15 Assign overhead to Jobs K52 and 157. , Dec. 15 Transfer costs from Jobs KS2 and J57 to finished goods. Requirement 1: Set up the job cost sheets for Job No.J57 and Job No. K52. Determine the total cost for each manufacturing special la (a) order for these jobs. (Round unit cost to nearest cent.) (b) Calculate the predetermined overhead rate for Waterways Journalize the activities from these job cost sheets in the general journal. Also journalize the other costs that (c) occurred during this period of time. Assuming that Manufacturing Overhead has a debit balance of $3,600, determine whether overhead has been lid) under/over applied and make the adjusting entry. / Page of 6 ZOOM W JOB NO 57 #units Joe No. K52 #units Direct Direct Labor Manu- facturing ahead Direct Material Direct Labor Manur facturing Overhead DAN Dale Cost of completed job Direct maters Direct labor Manufacturing verhead Total Unit cost Cost of completed job Direct materials Direct labor Manufacturing overhead Totalent Unit COME 161 IL Dare Account Titles Debit Credit lidi Page of 6 - ZOOM Because most of the parts for its irrigation systems are standard, Waterways handles the majority of its manufacturing as a process cost system. There are multiple process departments. Three of these departments are the Molding Cutting, and Welding Departments. All items eventually end up in the Packaging Department, which prepares items for sale in kits or individually The following information is available for the Molding Department for January Work in process beginning Units in process 0 Total costs in beginning work in process so Units started into procuction in January 60,000 Unts completed and transferred in January 50,000 Costs added to production: Materials $264.940 Labor 289,468 Overhead 60,578 Tatal costs added into production in January $614,986 Work in process ending: Units in process 10,000 Stage of completion for materials 50% Stage of completion for labor and overhead 10% Requirement 2: Prepare a production cost report for Waterways for January an the next tab Page of 6 ZOOM Requirement 2: Waterways Corporation Molding Department Production Cost Report Month Ended January 31, 2020 Physical Direct Units Materials Conversion Costs QUANTITIES Units to be accounted for: Beginning work in process Started into production Total units to be accounted for Units accounted for Transferred out completed Ending work-in-process Total units accounted for) Direct Materials Conversion Costs Total Costs COSTS Unit Costs Beginning work-in-process Costs added to production during period Total costs to be accounted for! (Divided by) Equivalent Units Unit Costs Costs to be accounted for Beginning work-in-process Started into production Total costs (to be accounbted for) COST RECONCILIATION SCHEDULE Costs accounted for: Transferred out Ending work-in-process Materials Conversion costs Total costs (accounted for) Page of 6 ZOOM Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companics use activity based costing (ABC) which uses multiple drivers items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied Overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. Requirement 3: Using the following information, determine the overhead rates and the actual cost assigned for each of the activity cost pools in a possible ABC system for Waterways Activity Based Overhead Rates Actual Costs Assigned Activity Cost Pools Irrigation installation Machining (all machine use) Customer orders Design Selling Cost Drivers Labarcos Machine hours Number of orders Cost per design Number of sales calls Estimated Overhead $1,998,432 1,670,400 30,636 820 350,400 Expected Use of Cost Drivers per Activity 12,960 33,408,000 2,553 8 21,900 Actual Use of Drivers 12,941 33,409,000 2.520 7 22,100 Page of 6 ZOOM For all requirements: Show all work - this can be done by using Excel formulas and cell references or by showing formulas used Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrigate farms, parks, commercial projects, and private lawns. It has a centrally located factory in a U.S. city that manufactures the products it markets to retail outlets across the nation. It also maintains a division that performs installation and warranty servicing in six metropolitan areas. The mission of Waterways is to manufacture quality parts that can be used for effective irrigation projects that also conserve water. By that effort, the company hopes to satisfy its customers, perform rapid and responsible service, and serve the community and the employees who represent them in each community. The company has been growing rapidly, so management is considering new ideas to help the company continue its growth and maintain the high quality of its products Waterways has two major public park projects to provide with comprehensive irrigation in one of its service locations this month. Job 157 and Job K52 involve 15 acres of landscaped terrain which will require special-order sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December, . The predetermined overhead rate is based on machine hours. The expected machine hour use for the year is 2,112 hours, and the anticipated overhead costs are $840,576 for the year. The machines were used by workers on projects KS2 and 157 during December. Six machine hours were used for project K52, and 8.5 machine hours were used for project J57. Both of these special orders were completed on December 15, producing 237 sprinkler heads for J57 and 142 sprinkler heads for K52. Additional job order activities during this period of time included: LI T Dec. 1 Purchased raw materials from Durbin Supply Company on account for $53,200. 1 Issued $40,000 of direct materials from the company's inventory to jobs other than K52 and J57 and $3,000 of Dec. 2 indirect materials. Dec. 5 Requisitioned raw materials from the company's inventory to Job K52 - $3,193 and J57 $6,386 Dec 12 Incurred factory salaries and wages in the amount of $65,000. Dec. 12 Based on time tickets, labor related to Job K52 - $99 and J57 - $198 Dec. 13 Paid the factory's water bill of $9,000. Dec. 15 Assign overhead to Jobs K52 and 157. , Dec. 15 Transfer costs from Jobs KS2 and J57 to finished goods. Requirement 1: Set up the job cost sheets for Job No.J57 and Job No. K52. Determine the total cost for each manufacturing special la (a) order for these jobs. (Round unit cost to nearest cent.) (b) Calculate the predetermined overhead rate for Waterways Journalize the activities from these job cost sheets in the general journal. Also journalize the other costs that (c) occurred during this period of time. Assuming that Manufacturing Overhead has a debit balance of $3,600, determine whether overhead has been lid) under/over applied and make the adjusting entry. / Page of 6 ZOOM W JOB NO 57 #units Joe No. K52 #units Direct Direct Labor Manu- facturing ahead Direct Material Direct Labor Manur facturing Overhead DAN Dale Cost of completed job Direct maters Direct labor Manufacturing verhead Total Unit cost Cost of completed job Direct materials Direct labor Manufacturing overhead Totalent Unit COME 161 IL Dare Account Titles Debit Credit lidi Page of 6 - ZOOM Because most of the parts for its irrigation systems are standard, Waterways handles the majority of its manufacturing as a process cost system. There are multiple process departments. Three of these departments are the Molding Cutting, and Welding Departments. All items eventually end up in the Packaging Department, which prepares items for sale in kits or individually The following information is available for the Molding Department for January Work in process beginning Units in process 0 Total costs in beginning work in process so Units started into procuction in January 60,000 Unts completed and transferred in January 50,000 Costs added to production: Materials $264.940 Labor 289,468 Overhead 60,578 Tatal costs added into production in January $614,986 Work in process ending: Units in process 10,000 Stage of completion for materials 50% Stage of completion for labor and overhead 10% Requirement 2: Prepare a production cost report for Waterways for January an the next tab Page of 6 ZOOM Requirement 2: Waterways Corporation Molding Department Production Cost Report Month Ended January 31, 2020 Physical Direct Units Materials Conversion Costs QUANTITIES Units to be accounted for: Beginning work in process Started into production Total units to be accounted for Units accounted for Transferred out completed Ending work-in-process Total units accounted for) Direct Materials Conversion Costs Total Costs COSTS Unit Costs Beginning work-in-process Costs added to production during period Total costs to be accounted for! (Divided by) Equivalent Units Unit Costs Costs to be accounted for Beginning work-in-process Started into production Total costs (to be accounbted for) COST RECONCILIATION SCHEDULE Costs accounted for: Transferred out Ending work-in-process Materials Conversion costs Total costs (accounted for) Page of 6 ZOOM Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companics use activity based costing (ABC) which uses multiple drivers items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied Overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. Requirement 3: Using the following information, determine the overhead rates and the actual cost assigned for each of the activity cost pools in a possible ABC system for Waterways Activity Based Overhead Rates Actual Costs Assigned Activity Cost Pools Irrigation installation Machining (all machine use) Customer orders Design Selling Cost Drivers Labarcos Machine hours Number of orders Cost per design Number of sales calls Estimated Overhead $1,998,432 1,670,400 30,636 820 350,400 Expected Use of Cost Drivers per Activity 12,960 33,408,000 2,553 8 21,900 Actual Use of Drivers 12,941 33,409,000 2.520 7 22,100 Page