Question B2 Part ! The Golden Company Limited uses a job-order costing system and a predetermined overhead rate to apply manufacturing overhead cost to jobs based on the cost of materials used in production. At the beginning of the year, the company made estimates as a basis for computing the predetermined overhead rate: manufacturing overhead cost $280,000 and direct materials cost $250,000. The transactions happened during the year were as follows all purchases and services were acquired on account): a. Raw materials requisitioned for production (all direct materials) $110,000 b. Utility bills incurred in the factory $13,000. c. Costs for salaries and wages incurred: Direct labor $125,000. Indirect labor $61,000, and Selling and administrative salaries $98,000. d. Manufacturing overhead cost was applied to jobs. e. At the year end, the manufacturing overhead was overapplied by $49.200. Management decided to make adjustment. Required: Prepare journal entries to record the transactions above and show the letter (a) to (e). (12 marks) Part II One processing department at Lalu Company Limited had ending work in process inventory of $84.000 in October. During the month, the cost added to production during the month was $368,000 and the cost of transferred out units was $412,000. Required: Prepare a cost reconciliation report for the department for the month of October. (6 marks) Part III (a) Refer to our teaching materials, give one reason why a company sets predetermined overhead rate() (less than 30 words)? (4 marks) (b) What are they called when the product of the number of partially completed units and the percentage completion of those units (less than 5 words)? (1 mark) Page 7 of 11 Question B2 Part ! The Golden Company Limited uses a job-order costing system and a predetermined overhead rate to apply manufacturing overhead cost to jobs based on the cost of materials used in production. At the beginning of the year, the company made estimates as a basis for computing the predetermined overhead rate: manufacturing overhead cost $280,000 and direct materials cost $250,000. The transactions happened during the year were as follows all purchases and services were acquired on account): a. Raw materials requisitioned for production (all direct materials) $110,000 b. Utility bills incurred in the factory $13,000. c. Costs for salaries and wages incurred: Direct labor $125,000. Indirect labor $61,000, and Selling and administrative salaries $98,000. d. Manufacturing overhead cost was applied to jobs. e. At the year end, the manufacturing overhead was overapplied by $49.200. Management decided to make adjustment. Required: Prepare journal entries to record the transactions above and show the letter (a) to (e). (12 marks) Part II One processing department at Lalu Company Limited had ending work in process inventory of $84.000 in October. During the month, the cost added to production during the month was $368,000 and the cost of transferred out units was $412,000. Required: Prepare a cost reconciliation report for the department for the month of October. (6 marks) Part III (a) Refer to our teaching materials, give one reason why a company sets predetermined overhead rate() (less than 30 words)? (4 marks) (b) What are they called when the product of the number of partially completed units and the percentage completion of those units (less than 5 words)? (1 mark) Page 7 of 11
