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Question 1 Sampson Company uses a job order cost system with overhead applied based on direct labor hours.See estimated amounts below. Note the beginning balances
Question 1
Sampson Company uses a job order cost system with overhead applied based on direct labor hours.See estimated amounts below. Note the beginning balances for Finished Goods (Job 101) and Work-in-Process (Jobs 102 & 103) for the costs accumulated to date. Also note, the beginning balances in the other balance sheet accounts. | |||||
Estimated Overhead for 2018 | 720,000 | ||||
Estimated Direct Labor Hours for 2014 | 24,000 | ||||
During January the company had the following transactions: | |||||
(a) | Purchased raw materials on account in the amount of: | 10,000 | |||
(b) | Issued the following materials into production: | ||||
Amount | Explanation | ||||
Direct materials | 7,000 | Job 102 | 2,000 | ||
Job 103 | 5,000 | ||||
Indirect materials | 2,000 | Used on both jobs. | |||
Total | 9,000 | ||||
(c) | Recorded salaries and wages as follows: | ||||
Amount | Explanation | ||||
Direct labor | 10,000 | Job 102 | 6,000 | ||
Job 103 | 4,000 | ||||
Indirect labor | 4,000 | For factory supervision | |||
Salaries | 5,000 | For administrative staff | |||
Total | 19,000 | ||||
(d) | Applied overhead to jobs based on the number of direct labor hours required | ||||
Job Number | Direct labor hours | ||||
Job 102 | 300 | ||||
Job 103 | 200 | ||||
Total | 500 | ||||
(e) | Recorded the following actual manufacturing costs: | ||||
Amount | Explanation | ||||
Rent | 6,000 | Paid factory rent in cash | |||
Depreciation | 5,000 | Factory equipment | |||
Insurance | 3,000 | Had one month of factory insurance policy expire | |||
Utilities | 2,000 | Received factory utility bill but did not pay it. | |||
Total | 16,000 | ||||
(f) | Recorded the following general and administrative costs: | ||||
Amount | Explanation | ||||
Advertising | 2,000 | Advertising paid in cash | |||
Depreciation | 3,000 | Office equipment | |||
Other expenses | 1,000 | Miscellaneous expense incurred but not paid. | |||
Total | 6,000 | ||||
(g) | Sold Job 101, which is recorded in Finished Goods: | ||||
Sales Price | 55,000 | ||||
Cost | 30,000 | ||||
(h) | Completed Job 102 but did not sell it; Job 103 is still in process at year-end. | ||||
Required: | |||||
1 | Compute the predetermined overhead rate. | ||||
Predetermined overhead rate | |||||
2 | Compute how much overhead would be applied to jobs during the period: | ||||
Overhead applied | |||||
3 | Compute the total cost of Jobs 102 and 103 at the end of the period. You will enter your calculation in the 'Ledger Accounts' tab of this workbook. | ||||
Where will the cost of each of these jobs appear on the Balance sheet? | |||||
4 | Post the journal entries to the 'T' Accounts in the 'Ledger Accounts' tab. Calculate the ending balances in all of the accounts. | ||||
5 | Calculate the amount of over- or underapplied overhead in the 'Ledger Accounts' tab. | ||||
6 | Post the journal entry in the T accounts to dispose of the overhead balance in the 'Ledger Accounts' tab. | ||||
7 | Prepare statement of cost of goods manufactured report in the 'Reports' tab. | ||||
8 | Prepare income statement in the 'Reports' tab. | ||||
9 | Prepare basic balance sheet in the 'Reports' tab. | ||||
Question 2
Raw Materials Inventory | Manufacturing Overhead | |||||||
1/1/18 (Beg) | 10,000 | |||||||
Work in Process Inventory | Job Sheet: 102 | Job Sheet: 103 | ||||||
1/1/18 (Beg) | 15,000 | 1/1/18 (Beg) | 15,000 | 0 | ||||
Finished Goods | Cost of Goods Sold | |||||||
1/1/18 (Beg) | 30,000 | |||||||
Sales Revenue | Selling, General, and Administrative Expenses | |||||||
Cash and Other Assets | Payables and Other Liabilities | |||||||
1/1/18 (Beg) | 100,000 | 85,000 | 1/1/18 (Beg) | |||||
Stockholders' Equity | ||||||||
70,000 | 1/1/18 (Beg) | |||||||
Question 3
7 | Sampson Company | |||||||
Cost of Goods Manufactured Report | ||||||||
For the Month of January | ||||||||
Beginning Raw Materials Inventory | ||||||||
Plus: Raw Material Purchases | ||||||||
Less: Indirect Material Used | ||||||||
Less: Ending Raw Materials Inventory | ||||||||
Direct Materials Used in Production | ||||||||
Direct Labor | ||||||||
Manufacturing Overhead | ||||||||
Total Current Manufacturing Costs | ||||||||
Plus: Beginning Work in Process Inventory | ||||||||
Total Work in Process | ||||||||
Less: Ending Work in Process Inventory | ||||||||
Cost of Goods Manufactured* | ||||||||
8 | Sampson Company | |||||||
Income Statement | ||||||||
For the Month of January | ||||||||
Sales Revenue | ||||||||
Less: Cost of Goods Sold | ||||||||
Beginning Finished Goods Inventory | ||||||||
Plus: Cost of Goods Manufactured* (see schedule above) | ||||||||
Cost of Goods Available for Sale | ||||||||
Less: Ending Finished Goods Inventory | ||||||||
Unadjusted Cost of Goods Sold | ||||||||
Under-/Overapplied Overhead | ||||||||
Adjusted Cost of Goods Sold | ||||||||
Gross Profit | ||||||||
Less: Operating (Period) Expenses | ||||||||
Net Income from Operations | ||||||||
9 | Sampson Company | |||||||
Balance Sheet | ||||||||
As of January 31st | ||||||||
Assets | Liabilities | |||||||
Cash and Other Assets | Payables and Other Liabilities | |||||||
Raw Materials Inventory | ||||||||
Work in Process Inventory | ||||||||
Finished Goods Inventory | Stockholders' Equity | |||||||
Total Assets | ||||||||
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