vallanuwu Uppvuu 7-31 Journal entries and T-accounts (continuation of 7-30). Prepare journal entries and post them to T-accounts for all transactions in Exercise 7-30, including requirement 2. Summarize how these journal entries differ from the normal-costing entries described in Chapter 4, pages 120-123. Price and efficiency variances, benchmarking. Nantucket Enterprises manufactures insulated hutes nationally in lots of 12 is the P Explanations of Transactions We next look at a summary of Robinson Company's transactions for February 2017 and the corresponding journal entries for those transactions. 1. Purchases of materials (direct and indirect) on credit, $89,000 Materials Control 89,000 Accounts Payable Control 89,000 2. Usage of direct materials, $81,000, and indirect materials, $4,000 Work-in-Process Control Manufacturing Overhead Control Materials Control 81,000 4,000 85,000 3. Manufacturing payroll for February: direct labor, $39,000, and indirect labor, $15,000, paid in cash Work-in-Process Control Manufacturing Overhead Control Cash Control 39,000 15,000 54,000 4. Other manufacturing overhead costs incurred during February, $75,000, consisting of . supervision and engineering salaries, $44,000 (paid in cash); . plant utilities, repairs, and insurance, $13,000 (paid in cash); and plant depreciation, $18,000 Manufacturing Overhead Control Cash Control Accumulated Depreciation Control 75,000 57,000 18,000 Allocation of manufacturing overhead to jobs, S80,000 Under normal costing, manufacturing overhead allocated or manufacturing over head applied is the amount of manufacturing overhead costs allocated to individual jobs based on the budgeted rate (540 per direct manufacturing labor-hour)plied by the actual quantity of the allocation base used for each job. The total actual direct manufacturing labor-hours across all jobs in February 2017 total 2.000.) Manufacturing overhead allocated contains all manufacturing overhead costs assigned to jobs using a STEMN MANUFACTURNO 123 Wort-le-Process Control Manufacturing Overhead Allocated 0.00 300 D cost-allocation base because overhead costs cannot be traced specifically to jobs in an economically feasible way Keep in mind the distinct difference between transactions + and S. le transaction 4, actual overhead costs incurred throughout the month are added 'deb- ited) to the Manufacturing Overhead Control account. These costs are not debited to Work-in-Process Control because, unlike direct costs, they cannot be traced to indi- vidual jobs. Manufacturing overhead costs are added (debited) to individual jobs and to Work-in-Process Control only when manufacturing overhead costs are allocated in transaction 5. At the time these costs are allocated, Manufacturing Overhead Control is, in effect, decreased (credited) via its contra account, Manufacturing Overhead Allocated. Manufacturing Overhead Allocated is referred to as a con- tra account because the amounts debited to it represent the amounts credited to the Manufacturing Overhead Control account. Having Manufacturing Overhead Allocated as a contra account allows the job-costing system to separately retain in- formation about the manufacturing overhead costs the company has incurred in the Manufacturing Overhead Control account) as well as the amount of manufacturing overhead costs it has allocated in the Manufacturing Overhead Allocated account). If the allocated manufacturing overhead had been credited to manufacturing over head control, the company would lose information about the actual manufacturing overhead costs it is incurring. Under the normal-costing system described in our Robinson Company example, at the beginning of the year, the company calculated the budgeted manufacturing overhead rate of $40 per direct manufacturing labor-hour by predicting the company's annual manufacturing overhead costs and annual quantity of the cost-allocation base. Almost certainly, the actual amounts allocated will differ from the predictions. We discuss what to do with this difference later in the chapter. 6. The sum of all individual jobs completed and transferred to finished goods in February 2017 is $188,800 Finished Goods Control 188,800 188,800 Work-in-Process Control 7. Cost of goods sold, $180,000 15.000, Cost of Goods Sold 180.000 Finished Goods Control 180,000 & Marketing costs for February 2017, S45,000, and customer service costs for February 2017, $15,000. paid in cash Marketing Expenses 45,000 Customer Service Expenses 15.000 Cash Control 80.000 9. Sales revenues from all jobs sold and delivered in February 2017, all on credit, $270,000 Accounts Receivable Control 270.000 Revenues 270.000 vallanuwu Uppvuu 7-31 Journal entries and T-accounts (continuation of 7-30). Prepare journal entries and post them to T-accounts for all transactions in Exercise 7-30, including requirement 2. Summarize how these journal entries differ from the normal-costing entries described in Chapter 4, pages 120-123. Price and efficiency variances, benchmarking. Nantucket Enterprises manufactures insulated hutes nationally in lots of 12 is the P Explanations of Transactions We next look at a summary of Robinson Company's transactions for February 2017 and the corresponding journal entries for those transactions. 1. Purchases of materials (direct and indirect) on credit, $89,000 Materials Control 89,000 Accounts Payable Control 89,000 2. Usage of direct materials, $81,000, and indirect materials, $4,000 Work-in-Process Control Manufacturing Overhead Control Materials Control 81,000 4,000 85,000 3. Manufacturing payroll for February: direct labor, $39,000, and indirect labor, $15,000, paid in cash Work-in-Process Control Manufacturing Overhead Control Cash Control 39,000 15,000 54,000 4. Other manufacturing overhead costs incurred during February, $75,000, consisting of . supervision and engineering salaries, $44,000 (paid in cash); . plant utilities, repairs, and insurance, $13,000 (paid in cash); and plant depreciation, $18,000 Manufacturing Overhead Control Cash Control Accumulated Depreciation Control 75,000 57,000 18,000 Allocation of manufacturing overhead to jobs, S80,000 Under normal costing, manufacturing overhead allocated or manufacturing over head applied is the amount of manufacturing overhead costs allocated to individual jobs based on the budgeted rate (540 per direct manufacturing labor-hour)plied by the actual quantity of the allocation base used for each job. The total actual direct manufacturing labor-hours across all jobs in February 2017 total 2.000.) Manufacturing overhead allocated contains all manufacturing overhead costs assigned to jobs using a STEMN MANUFACTURNO 123 Wort-le-Process Control Manufacturing Overhead Allocated 0.00 300 D cost-allocation base because overhead costs cannot be traced specifically to jobs in an economically feasible way Keep in mind the distinct difference between transactions + and S. le transaction 4, actual overhead costs incurred throughout the month are added 'deb- ited) to the Manufacturing Overhead Control account. These costs are not debited to Work-in-Process Control because, unlike direct costs, they cannot be traced to indi- vidual jobs. Manufacturing overhead costs are added (debited) to individual jobs and to Work-in-Process Control only when manufacturing overhead costs are allocated in transaction 5. At the time these costs are allocated, Manufacturing Overhead Control is, in effect, decreased (credited) via its contra account, Manufacturing Overhead Allocated. Manufacturing Overhead Allocated is referred to as a con- tra account because the amounts debited to it represent the amounts credited to the Manufacturing Overhead Control account. Having Manufacturing Overhead Allocated as a contra account allows the job-costing system to separately retain in- formation about the manufacturing overhead costs the company has incurred in the Manufacturing Overhead Control account) as well as the amount of manufacturing overhead costs it has allocated in the Manufacturing Overhead Allocated account). If the allocated manufacturing overhead had been credited to manufacturing over head control, the company would lose information about the actual manufacturing overhead costs it is incurring. Under the normal-costing system described in our Robinson Company example, at the beginning of the year, the company calculated the budgeted manufacturing overhead rate of $40 per direct manufacturing labor-hour by predicting the company's annual manufacturing overhead costs and annual quantity of the cost-allocation base. Almost certainly, the actual amounts allocated will differ from the predictions. We discuss what to do with this difference later in the chapter. 6. The sum of all individual jobs completed and transferred to finished goods in February 2017 is $188,800 Finished Goods Control 188,800 188,800 Work-in-Process Control 7. Cost of goods sold, $180,000 15.000, Cost of Goods Sold 180.000 Finished Goods Control 180,000 & Marketing costs for February 2017, S45,000, and customer service costs for February 2017, $15,000. paid in cash Marketing Expenses 45,000 Customer Service Expenses 15.000 Cash Control 80.000 9. Sales revenues from all jobs sold and delivered in February 2017, all on credit, $270,000 Accounts Receivable Control 270.000 Revenues 270.000