Section 1 1. Boeing Company manufactures batteries and uses job - order costing system. For the current year, the manager of the company estimated that the company would need 80,000 machine hours and incur a fixed manufacturing overheard cost $325,000 and a variable manufacturing overhead cost of $7.5 per machine hour. Boeing Company had beginning inventory as follows: Raw Material $14,000 WIP $12,400 Finished Goods $20,000 The following information relates to operation in the current year. The raw materials purchased include both direct and indirect materials. Assume that all transactions were on account. Purchase of Raw Materials $1516,000 (70 % Direct and 30% Indirect) Raw material requisitioned for the use in production Direct : $1070,000. Indirect : $230,000 Labour cost Direct : $33.5 per hr. Indirect : $18 per hr Salary for office employees $40,000 Deprecation on Factory Building $220,000 Depreciation on Corporate Building $180,000 Utility cost $100,000 (65% relates to factory and the rest relates to corporate) Page 1 of 4 Factory Machinery Maintenance Cost $15,000 Advertising Expense $20,000 Rent $200,000 (70% relates to factory and the rest relates to corporate) Additional Information: - The direct labours worked a total of 9,300 hours. The indirect labours worked for a total of 11,300 hours. - Manufacturing overhead was applied to production. The company received lesser than expected orders during the year for which the machines ran for a total of 70,000 hours. - During the year, a total of 46,000 units of batteries were manufactured and transferred to finished goods, out of which 43,000 were sold to customers at the selling price of $70 per battery. Required: a. Use the information given above to write the appropriate journal entries for Boeing Company. b. Calculate whether the manufacturing overhead was over applied or under applied. Write the appropriate journal entry to record the over/under application. 2. Harmon and Co. manufactures maple syrup and uses process costing system. The company has two departments Mixing Department and Packaging Department. The maple syrups are sold for $20 each. Information regarding the Mixing Department's April month's operation is as follows: The department had beginning inventory of 4,300 units (80% completed with respect to material at a cost of $38,700 and 65% completed with respect to conversion at a cost of $48,000). 23,000 units of sent into production in the month of April. During the month a total of 26,000 units of maple syrup were completed a finished goods. The ending work in process inventories were completed at 65% and 70%, in relation to material and conversion, respectively. The total cost of production added during the month were $507,800 in relation to material cost and $490,000, in relation to conversion cost. Required: a. Calculate the cost of the units completed to transfer into the Packaging Department of Harmon and Co. and the cost of the ending work in process inventory in the first department. Section-B 1. Select a product from a small local store in your area who manufactures their own goods and sell it to customers all through the year. Based on the product that you have selected (can be imaginary as well), discuss the following points : a. Write down the production process of the mentioned product. You MUST include what kind of raw materials the manufacturers use, what are the direct labours needed to manufacture the produc what can be regarded as the MOH cost for the manufacturer. You must write the details including numerical calculation of RM, DL, MOH (No need to calculate the predetermined OH rate or the applied MOH, just give examples of what can be regarded as MOH costs for your product). Explain in your own words, how the product is manufactured. (You MUST write a minimum of 300 words with no upper limit) b. Based on the nature of the product that you have chosen, suggest to the owner of this manufacturing company whether they should use job-order costing or process costing system (You MUST write a minimum of 100 words with no upper limit)