Question #3

For the year ended March 31, 2019, the job cost sheets of Walkers Inc contained the following data;

1. Raw material purchases $50,000 on account.
2. Raw Materials requisitioned for use in production was $40,000($30,000 direct materials and $10,000 indirect).
3. The following employee costs were incurred: Direct labour $15,000,Indirect Labour $5,000
4. Manufacturing overhead paid during the year was $95,000 all on account
5. Manufacturing overhead is applied on a predetermined rate based on estimated direct labor hours. Estimated overhead of $100,000 and estimated direct labor hours of 8,000 were used to determine the rate. Actual hours for the year was 9,000.
6. Cost of Goods Manufactured was $150,000.
7. Sales for the year totaled $225,000 and were all on account. The total cost of those products was $135,500 according to their job sheets.
8. Beginning Inventory numbers were as follows: Raw Materials $10,000, WIP $15,000, Finished Goods Inventory $25,000

1. Calculate the predetermined overhead rate. (2 marks)

2. Prepare journal entries to record the transactions for the year. No explanations are required.(14 Marks) Use Transactions #s as reference

Itm		Accounts	Debit	Credit

3.Calculate the over/under applied overhead. Is it over or under? (2 marks)

4. Assuming that the company allocates its under/over-allocated overhead to Cost of Goods Sold, prepare a journal entry 2 Marks

Account	Dr	Cr