Sampson Company uses a job order cost system with overhead applied to products based on direct labor hours. Based on previous history, the company estimated its total overhead for the coming year (2014) to be $720,000 and its total direct labor hours to be 24,000.

Confirming Pages Group Assignment ACC433 - Fall 2016 Required -In groups, answer the 8 questions following the case in one report. Ensure that each question is well labeled and provide one document only that includes all answers. -The report should include a cover page with all group members full names and student numbers. -Please use our class time during the week of October 10th to work on this assignment in additon to any other time you may require. -Due October 16th at midnight - Please have one group member upload the completed report onto the Group Assignment location on blackboard. This is the same location where you are able to view the assignment Samson Company Case Sampson Company uses a job order cost system with overhead applied to products based on direct labor hours. Based on previous history, the company estimated its total overhead for the coming year (2014) to be $720,000 and its total direct labor hours to be 24,000. On January 1, 2014, the general ledger of Sampson Company revealed that it had one job in process (Job 102) for which it had incurred a total cost of $15,000. Job 101 had been finished the previous month for a total cost of $30,000 but was not yet sold. The company had a contract for Job 103 but had not started working on it yet. Other balances in Raw Materials Inventory and other assets, liabilities, and stockholders' equity accounts are summarized on the next page. whi25516_ch02_038-097.indd 94 18/09/12 12:09 PM Confirming Pages SAMPSON COMPANY General Ledger Accounts Raw Materials Inventory 1/1 Balance Manufacturing Overhead 10,000 Work in Process Inventory (WIP) 1/1 Balance Finished Goods Inventory 15,000 1/1 Balance Individual Job Cost Sheets (subsidiary ledgers to WIP) Beg. Balance 1 Direct Materials 1 Direct Labor 1 Applied OH Total Mfg. Cost 1/1 Balance Job 102 Job 103 15,000 30,000 Cost of Goods Sold Sales Revenue Selling, General, and Administrative Expenses Cash and Other Assets Payables and Other Liabilities 100,000 85,000 1/1 Balance Stockholders' Equity 70,000 whi25516_ch02_038-097.indd 95 1/1 Balance 18/09/12 12:09 PM Confirming Pages During January, the company had the following transactions: (a) Purchased $10,000 worth of raw materials on account. (b) Issued the following materials into production: Item Direct materials Indirect materials Total materials issued Cost Explanation $7,000 2,000 $9,000 Job 102, $2,000; Job 103, $5,000 Used on both jobs (c) Recorded salaries and wages payable as follows: Item Direct labor Indirect labor Salaries Total payroll cost Cost Explanation $10,000 4,000 5,000 $19,000 Job 102, $6,000; Job 103, $4,000 For factory supervision For administrative staff (d) Applied overhead to jobs based on the number of direct labor hours required: Job Number Direct Labor Hours Job 102 Job 103 Total 300 hours 200 hours 500 hours (e) Recorded the following actual manufacturing costs: Item Rent Depreciation Insurance Utilities Total cost Cost Explanation $ 6,000 5,000 3,000 2,000 $16,000 Paid factory rent in cash Factory equipment Had one month of factory insurance policy expire Received factory utility bill but did not pay it (f) Recorded the following general and administrative costs: Item Advertising Depreciation Other expenses Total cost Cost Explanation $2,000 3,000 1,000 $6,000 Advertising paid in cash Office equipment Micellaneous expenses incurred but not paid (g) Sold Job 101, which is recorded in Finished Goods Inventory at a cost of $30,000, for $55,000. (h) Completed Job 102 but did not sell it; Job 103 is still in process at year-end. whi25516_ch02_038-097.indd 96 18/09/12 12:09 PM Confirming Pages Required: 1. 2. 3. 4. 5. 6. 7. 8. Compute and interpret the predetermined overhead rate. How much overhead would be applied to jobs during the period? Compute the total cost of Jobs 102 and 103 at the end of the period. Where would the cost of each of these jobs appear on the year-end balance sheet? Prepare journal entries to record the January transactions and post the entries to the general ledger T-accounts given earlier in the problem. Calculate the amount of over- or underapplied overhead. Prepare the journal entry to dispose of the overhead balance assuming that it had been a yearend balance instead of a month-end balance. Post the effect to the general ledger T-accounts. Prepare a statement of cost of goods manufactured report including the adjustment for overor underapplied overhead. Prepare a brief income statement for Sampson Company. whi25516_ch02_038-097.indd 97 18/09/12 12:10 PM