Question 2 - 18 marks Silas Compay uses a job order costing system. On Jan 1, the beginning of the current year, the company's inventory balance were as follows: Raw Materials $ 25,500 Work in Process $ 13,800 Finished Goods $ 31,900 The company applies overhead cost to jobs on the basis of machine hours. For the current year, the company estimated that it would work 37,900 machine hours and incur $151,600 in manufacturing overhead. The following transactions were recorded in the year: a. Raw Materials were purchased on account for $238,000. b. Raw Materials were requisitioned into production $209,000 (10% was indirect and 90% was direct) The employees worked $335,300 which represented the obligation for the employer to pay them (Admin Salaries were $87,600, Sales Commissions were $41,700, Indirect Labour was $30,800 and Direct Labour was $175,200. d. Utilities were incurred in the factory for $50,550. e Prepaid Insurance expired during the year $19,500 (25% related to selling and admin functions and the remainder related to factory operations). 1. Advertising costs were incurred for $59,500. g Depreciation was recorded for the year $71,400 (20% relates to selling and admin and the remainder relates to factory operations). Manufacturing Overhead costs were applied to production. The company recorded 43,800 machine hours for the year. 1. Goods that cost $534,600 to manufacture according to their job cost sheets were tranferred to the Finished Goods Warehouse. i Sales for the year totalled $788,400 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $525,800. h Required 1 Prepared Journal entries to record the transactions above. Do not round intermediate calculations (11 marks). 2 Is manufacturing overhead underapplied or overapplied for the year? Show all your calculations (3 marks). 3 Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead accounts based on the ending balances of the relevant accounts. Do not round intermediate calculations (4 marks). Question 2 - 18 marks Silas Compay uses a job order costing system. On Jan 1, the beginning of the current year, the company's inventory balance were as follows: Raw Materials $ 25,500 Work in Process $ 13,800 Finished Goods $ 31,900 The company applies overhead cost to jobs on the basis of machine hours. For the current year, the company estimated that it would work 37,900 machine hours and incur $151,600 in manufacturing overhead. The following transactions were recorded in the year: a. Raw Materials were purchased on account for $238,000. b. Raw Materials were requisitioned into production $209,000 (10% was indirect and 90% was direct) The employees worked $335,300 which represented the obligation for the employer to pay them (Admin Salaries were $87,600, Sales Commissions were $41,700, Indirect Labour was $30,800 and Direct Labour was $175,200. d. Utilities were incurred in the factory for $50,550. e Prepaid Insurance expired during the year $19,500 (25% related to selling and admin functions and the remainder related to factory operations). 1. Advertising costs were incurred for $59,500. g Depreciation was recorded for the year $71,400 (20% relates to selling and admin and the remainder relates to factory operations). Manufacturing Overhead costs were applied to production. The company recorded 43,800 machine hours for the year. 1. Goods that cost $534,600 to manufacture according to their job cost sheets were tranferred to the Finished Goods Warehouse. i Sales for the year totalled $788,400 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $525,800. h Required 1 Prepared Journal entries to record the transactions above. Do not round intermediate calculations (11 marks). 2 Is manufacturing overhead underapplied or overapplied for the year? Show all your calculations (3 marks). 3 Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead accounts based on the ending balances of the relevant accounts. Do not round intermediate calculations (4 marks)
