The McMahon Construction Company builds bridges. In September and October $20$XX$,$ the company worked on a bridge covering the Kleinfeld River in Northern Montana. The McMahon Company has two departments$$the Precast Department and the Construction Department. The Precast Department is responsible for building structural elements of bridges in temporary locations $($plants$)$ located near the construction sites. The Construction Department operates at the bridge site and they are responsible for assembling the precast structural elements. The estimated costs for Kleinfeld River Bridge for the Precast Department were $$1,750,000$ for direct materials, $$240,000$ for direct labor, and $$300,000$ for overhead. The estimated costs for the Construction Department regarding the Kleinfeld River Bridge were $$400,000$ for direct materials, $$180,000$ for direct labor, and $$260,000$ for overhead. Overhead is applied on the last day of the month. The Overhead application rate for the Precast Department is $$30$ per machine hour. The Overhead application for the Construction Department is $150\%$ of direct labor cost.

Transactions for September

Sept. $1$: Purchased $$1,170,000$ of material on account for the Precast Department to start the building of structural elements. All of the material was issued to production, of the issuance amount, $$720,000$ is considered direct material.

Sept. $4$: Installed utilities at bridge site at a total cost of $$30,000.$ The amount will be paid later in the month. $($Transaction applies to Construction Department.$)$

Sept. $6$: Paid rent for the temporary construction site housing the Precast Department, $$7,200.$

Sept. $15$: Completed the bridge support pillars by the Precast Department and transfer everything to the construction site.

Sept. $19$: Paid machine rental expense of $$65,000$ incurred by the Construction Department for clearing the bridge site and digging the foundations for bridge supports.

Sept. $23$: Purchased additional materials costing $$1,510,000$ on account.

Sept. $30$: The company paid the bills for the Precast Department: utilities, $$7,200$; direct labor, $$50,000$; insurance, $$6,700,$ indirect labor, $$8,200.$ Departmental depreciation was recorded, $$21,500.$

Sept. $30$: The company paid the bills for the Construction Department: utilities, $$2,600$; direct labor, $$19,500$; indirect labor, $$6,100$; and insurance, $$2,500.$ Department depreciation was recorded on equipment, $$9,450.$

Sept. $30$: Issued a check to pay for the material purchased on Sept. $1$ and Sept. $23.$

Sept. $30$: Applied overhead to production in each department; $6,400$ machine hours were worked in the Precast Department for September. Note: Direct Labor Costs for the Construction Department were $$19,500.$

Transactions for October

Oct. $1$: Transferred additional structural elements from the Precast Department to the construction site. The construction department incurred an expense of $$7,000$ to rent a crane.

Oct. $4$: Issued $$1,010,000$ of material to the Precast Department. Of this amount, $$860,000$ was considered direct.

Oct. $7$: Paid rent of cash of $$7,500$ in cash for the temporary site that is occupied by the Precast Department.

Oct. $12$: Issued $$390,000$ of material to the Construction Department. Of this amount, $$220,000$ was considered direct.

Oct. $15$: Transferred additional structural elements from the Precast Department to the construction site.

Oct. $25$: Transferred the final batch of structural elements from the Precast Department to the construction site.

Oct. $29$: Completed the bridge.

Oct. $31$: Paid the final bills for the month in the Precast Department: utilities, $$14,000$; direct labor, $$120,000$; insurance, $$10,200$; indirect labor, $$18,300.$ Department depreciation was recorded, $$21,500.$

Oct. $31$: Paid the final bills for the month in the Construction Department: utilities, $$5,300$; direct labor, $$144,500$; indirect labor, $$19,200$; and insurance, $$7,400.$ Depreciation was recorded on equipment was $$9,450.$

Oct. $31$: Applied overhead in each department. The precast department recorded $4,120$ machine hours in October.

Oct. $31$: Billed the state of Montana for the completed bridge at the contract price of $$3,850,000.$

Oct. $31$: Please record the cost of the completed jobs to Finished Goods Inventory.

Instructions

Please journalize the entries for the preceding transactions. For purposes of this case study, it is not necessary to transfer direct material and direct labor from one department to another.

Please use the following accounts: Cash; Raw Materials Inventory, Manufacturing Overhead$-$Precast Department, Manufacturing Overhead$-$Construction Department, Work in Process$-$Precast Department; Work in Process$-$Construction Department; Accumulated Depreciation $-$ Precast Department; Accumulated Depreciation $-$ Construction Department; Finished Goods Inventory; Cost of Goods Sold.