Question 1) The following transactions occurred in October at Pawnee Workshops, a custom manufacturer of furniture:
1. Purchased $16,000 of materials.
2. Issued $800 of supplies from materials inventory.
3. Purchased $11,200 of materials.
4. Paid for materials purchased in transaction (1)
5. Issued $13,000 in direct materials to the production department.
6. Incurred direct labor costs of $20,000, which were credited to Wages Payable.
7. Paid $21,200 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.
8. Applied overhead on the basis of 125 percent of $20,000 direct labor costs.
9. Recognized depreciation on manufacturing property, plant, and equipment of $10,000.
The following balances appeared in the accounts of Pawnee Workshops for October:
Beginning Ending
Materials Inventory $29,640
Work-in-Process Inventory 6,600
Finished Goods Inventory 33,200 $28,640
Costs of Goods Sold 52,680
a. Prepare journal entries to record the transactions.
b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.
Question 2) Queen corps estimates its manufacturing overhead to be $90,000 and its direct labor costs to be $200,000 for year 1.The actual direct labor costs were $50,000 for job 301,$75,000 for job 302,and $100,000 for job 303 during the year 1,the actual manufacturing overhead was $97,000.Manufacturing overhead is applied to jobs on the basis of direct labor costs using predetermined rates.
Required:
a) How much overhead was assigned to each job during year 1?
b) What was the over-or under applied manufacturing overhead for year 1?
c) Prepare an entry to allocate the under-or over applied overhead. Overhead applied in each of the inventory accounts is as follows:
Work-in-process inventory $10,125
Finished goods inventory 30,375
Cost of goods sold 60,750
At the beginning of the month, Julius Berger's consulting corp. had two jobs in process that had the following costs assigned from previous months:
Job Number Direct Labor Applied Overhaed
SY- 400 $23,040 ?
SY- 403 15,120 ?
During the month, jobs SY- 400 and SY- 403 were completed but not billed to customers. The completion costs for SY- 400 required $25,200 in direct labor. For SY- 403,$72,000 in labor was used.
During the month, the only new job, SY- 404 , was started but not finished. Total direct labor costs for all jobs amounted to $148,320 for the month. Overhead in this company refers to the costs of work that is not directly traced to particular jobs, including copying, printing, and travel costs to meet with clients. Overhead is applied at a rate of 60 percent of direct labor costs for this and periods. Actual overhead for the month was $90,000.
Required:
a) What are the costs of jobs SY - 400 and SY -403 at (1) the beginning of the month and (2) when completed?
b) What is the cost of Job SY- 404 at the end of the month?
c) How much was under or over applied service overhead for the month?