Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Lees Company uses a job-order costing system and a predetermined overhead rate based on machine hours. Estimated manufacturing overhead for the upcoming year was

The Lee’s Company uses a job-order costing system and a predetermined overhead rate based on machine hours. Estimated manufacturing overhead for the upcoming year was $1,000,000, and estimated machine hours were 25,000. On March 1, the company had only one job in work in process (Job No. 126) with total costs of $15,000. The following information pertains to the company’s activities for the month of March: 1. Raw materials were purchased on account for $75,000. 2. Jobs 127 and 128 were started during the month. 3. Raw materials totalling $70,000 were requisitioned for use in production. Of this total, $8,000 was for indirect materials. The direct materials were distributed as follows: Job No. 126 $16,000 Job No. 127 $32,000 Job No. 128 $14,000 4. Factory labor costs for the month totalled $160,000, of which $27,000 was for indirect labor. The direct labor was distributed as follows: Job No. 126 $33,000 Job No. 127 $75,000 Job No. 128 $25,000 5. The company had depreciation of $13,000 and expired insurance on the factory of $7,000 for the month of March. 6. Other manufacturing costs (excluding direct materials and direct labour) incurred but not paid totalled $27,000. 7. Manufacturing overhead was applied using the predetermined overhead rate. The following is the distribution of machine hours (MH) for March: Job No. 126 550 MH Job No. 127 800 MH Job No. 128 650 MH 8. Job No. 126 and Job No. 127 were completed during the month. 9. Job No. 126 was sold on account during March at a selling price of $154,800. Beginning balance as of March 1 were as follows: Materials $ 6,500 Work in process (Job No.126) 15,000 Finished goods 7,000

Required: a. Prepare journal entries to record the following activities of the company for March. Assume the company uses perpetual inventory system. i. The accumulation of raw materials costs and manufacturing overhead costs. (Item 1,5 & 6 from above) ii. The assignment of raw materials, factory labor costs to production. (Item 3 & 4) iii. The assignment of manufacturing overhead costs to production using the predetermined overhead rate based on machine hours. (Item 7) iv. The completion of Job No. 126 and Job No. 127. v. The sale of Job No. 126 on account.

b. Prepare the journal entry to adjust for the underapplied or overapplied overhead. Assume the amount is considered immaterial.

Step by Step Solution

3.40 Rating (162 Votes )

There are 3 Steps involved in it

Step: 1

The Lees Company Estimated Mfg OH for the upcoming year 1000000 Estimated Machine Hours 25000 Predetermined Overhead Rate per Machine Hour100000025000 4000 Ans a Journal Entries in the Book of The Lee... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Document Format ( 2 attachments)

PDF file Icon
60990d58ac220_210700.pdf

180 KBs PDF File

Word file Icon
60990d58ac220_210700.docx

120 KBs Word File

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cornerstones of Managerial Accounting

Authors: Mowen, Hansen, Heitger

3rd Edition

324660138, 978-0324660135

More Books

Students also viewed these Accounting questions

Question

F-account Cerrect Malance Balance

Answered: 1 week ago

Question

5. What are some other possible treatments?

Answered: 1 week ago

Question

4. In what ways is L-dopa treatment disappointing?

Answered: 1 week ago