Samuel Carney joined Jackson Enterprises as controller in October 2016. Jackson Enterprises manufactures and installs home greenhouses. The company uses a normal costing system with two direct cost pools, direct materials and direct manufacturing labor, and one indirect cost pool, manufacturing overhead. In 2016, manufacturing overhead was allocated to jobs at 120% of direct manufacturing labor cost. At the end of 2016 an immaterial amount of underallocated was closed out to cost of goods sold, and the company showed a small loss.

At the end if 2016, Carney decides to adjust the manufacturing overhead rate to 170% of direct labor cost. He explains to the company president that, because overhead was underallocated in 2016, this adjustment is necessary. Cost information for 2017 is in the photo below.

1. Insert the given information in the T-accounts provided. Calculate the following amounts to complete the T-accounts. a. Direct materials control, 12/31/2017 b. Manufacturing overhead allocated 2017 c. Cost of goods sold, 2017 2. Calculate the amount of under or overallocated manufacturing overhead. 3. Calculate Jackson's net operating income under the following: a. Under or overallocated manufacturing overhead is written off to costs of goods sold. b. Under or overallocated manufacturing overhead is prorated based on the ending balances in work in process, finished goods, and cost of goods sold. 4. Carney chooses operation 3a above, stating that the amount is immaterial. Comment on the ethical implications of his choice. Do you think that there were any ethical issues when he established the manufacturing overhead rate for 2017 back in late 2016? Refer to the IMA statement of ethical professional practice.

Data Table x and the company's se ulate the of goods nufacturing overhead head.) Direct materials control, 1/1/2017 Direct materials purchased, 2017 Direct materials added to production, 2017 Work in process control, 1/1/2017 Direct manufacturing labor, 2017 Cost of goods manufactured, 2017 Finished goods control, 1/1/2017 Finished goods control, 12/31/2017 Manufacturing overhead costs, 2017 24,000 700,000 620,000 250,000 930,000 3,061,590 129,000 322,920 1,400,000 Print Done Jackson Read the Direct Materials Control Work-in-Process Control Bal. Bal. Bal Bal Finished Goods Control Manufacturing OH Control Bal Bal Bal Bal. hoose from any list or enter any number in the input fields and then click Check Answer parts remaining Clear All IND Il L Bal. Bal. Bal. Bal. Finished Goods Control Manufacturing OH Control 11 Bal. Bal. Bal. Bal. Manufacturing OH Allocated Cost of Goods Sold Bal. Bal. Bal Bal Choose from any list or enter any number in the input fields and then click Check Answer. 8 of 9 (8 complete) At the end of 2016, Carney decides to company president that, because overt follows: the cost.info ement is under pressure to Canela asta a Table 24,000 700,000 620,000 Direct materials control, 1/1/2017 Direct materials purchased, 2017 Direct materials added to production, 2017 Work in process control, 1/1/2017 Direct manufacturing labor, 2017 Cost of goods manufactured, 2017 Finished goods control, 1/1/2017 Finished goods control, 12/31/2017 Manufacturing overhead costs, 2017 250,000 930,000 3,061,590 129,000 322,920 1,400,000 Print Done Clear All Data Table x and the company's se ulate the of goods nufacturing overhead head.) Direct materials control, 1/1/2017 Direct materials purchased, 2017 Direct materials added to production, 2017 Work in process control, 1/1/2017 Direct manufacturing labor, 2017 Cost of goods manufactured, 2017 Finished goods control, 1/1/2017 Finished goods control, 12/31/2017 Manufacturing overhead costs, 2017 24,000 700,000 620,000 250,000 930,000 3,061,590 129,000 322,920 1,400,000 Print Done Jackson Read the Direct Materials Control Work-in-Process Control Bal. Bal. Bal Bal Finished Goods Control Manufacturing OH Control Bal Bal Bal Bal. hoose from any list or enter any number in the input fields and then click Check Answer parts remaining Clear All IND Il L Bal. Bal. Bal. Bal. Finished Goods Control Manufacturing OH Control 11 Bal. Bal. Bal. Bal. Manufacturing OH Allocated Cost of Goods Sold Bal. Bal. Bal Bal Choose from any list or enter any number in the input fields and then click Check Answer. 8 of 9 (8 complete) At the end of 2016, Carney decides to company president that, because overt follows: the cost.info ement is under pressure to Canela asta a Table 24,000 700,000 620,000 Direct materials control, 1/1/2017 Direct materials purchased, 2017 Direct materials added to production, 2017 Work in process control, 1/1/2017 Direct manufacturing labor, 2017 Cost of goods manufactured, 2017 Finished goods control, 1/1/2017 Finished goods control, 12/31/2017 Manufacturing overhead costs, 2017 250,000 930,000 3,061,590 129,000 322,920 1,400,000 Print Done Clear All