problem 8-29

Direct labor Indirect labor 0,000 Prepaid insurance expired during the year, $3,000 (80 elaied to factory operations, and 2e related to selling and administrative activities. h. Miscellancous selling and administrative expenses incured, $9.500 i. Manufacturing overhead was applied to production. The company applies overhead on th basis of $8 per machine-hour, 7,500 machine-hours were recorded for the year. j Goods that cost $140,000 to manufacture according to their job cost sheets were transferred in the finished goods warehouse. k. Sales for the year totaled $250,000 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $130,000. L Collections from customers during the year totaled $245,000. m. Payments to suppliers on account during the year, $150,000; payments to employees for sala- ries and wages, $84,000. Required 1. Prepare a T-account for each account in the company's trial balance and enter the opening balances shown on the prior page. 2. Record the transactions above directly into the T-accounts. Prepare new T-accounts as needed. Key your entries to the letters (a) through (m) above. Find the ending balance in each T-accounts to close any balance in the Manufacturing Overhead account to Cost of Goods Prepare an income statement for the year. (Do not prepare a schedule of cost of goods account. acturin Sold 4 manufactured; all of the information needed for the income statement is available in the PROBLEM 8-29 Multiple Departments; Overhead Rates; Underapplied or Overapplied Overhead LO3, LO6, LO9] Hobart, Evans, and Nix is a small law firm that employs 10 partners and 12 support persons. The firm uses a job-order costing system to accumulate costs chargeable to each client, and it is onga nized into two departments-the Research and Documents Department and the Litigation Depar- ment. The firm uses predetermined overhead rates to charge the costs of these departments to its clients. At the beginning of the year, the firm's management made the following estimates for the year Research and itigation 24,000 9,000 $16,000 $450,000 $840,000 Direct attorney-hours Direct attorney cost Departmental overhead cost 18,000 $5,000 $900,000 $360,000 The predetermined overhead rate in the Research and Documents Department is research-hours, and the rate in the Litigation Department is based on direct attorney cost based on The costs charged to each client are made up of three elements: legal forms and supplies direct attorney costs incurred, and an applied amount of overhead from each department in work is performed on the case. Job-Order Costing Case 418-3 was initiated on February 23 and completed on May 16. During this period, the following costs and time were recorded on the case: Department Research and Ltigation 26 Direct attorney cost . $80 $350 $40 $5,700 Required: 1. Compute the predetermined overhead rate used during the year in the Research and Docu- 2. Using the rates you computed in (1) above, compute the total overhead cost applied to 3. What would be the total cost charged to Case 418-3? Show computations by department and 4. At the end of the year, the firm's records revealed thefollowing actual cost and operating data ments Department. Compute the rate used in the Litigation Department. Case 418-3 in total for the case. for all cases handled during the year Department Research and Litigation 26,000 8,000 15,000 $6,000 $750,000 $315,000 Direct attorney-hours.. Direct attorney cost $400,000 $870,000 Departmental overhead cost Determine the amount of underapplied or overapplied overhead cost in each department for the year PROBLEM 8 AOZT Volzhskije Motory of St. Petersburg, Russia, makes marine motors for vessels ranging in 30 T-accounts; Overhead Rates: Journal Entries [LO2, LO3, LO5, LO6, LO8 e trom harbor tugs to open-water icebreakers. (The Russian currency is the ruble, which is de- noted by RUR. All currency amounts below are in thousands of RUR.) 210 The company uses a job-order costing system. Only three jobs-Job 208, Job 209, and Job ere worked on during May and June. Job 208 was completed on June 20; the other two jobs uncompleted on June 30. Job cost sheets on the three jobs are given below