Reference no: EM132996160

Vintage Construction Company builds houses and uses a job order costing system in which each house is a job. The company also uses an account Construction Overhead to record overhead costs and applies overhead based estimated direct labor costs. For the year, the company estimated construction overhead of $1, 150,000 and total labor costs at $5,750,000.

The following events occurred during August:

a. Purchase materials on account, $400,000.

b. Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned.

                         Direct materials            Direct Labor

House 402           $58,000                       $44,000

House 403             62,000                        32,000

c. The company incurred total wages of $300,000. Use the data from item b. to assign the wages. Wages are not yet paid.

d. Depreciation of construction equipment , $6,700.

e. Other overhead costs incurred: Equipment rental paid in cash, $30,000; Worker liability insurance expired, $7,000.

f. Allocated overhead to jobs.

g. Completed both houses.

h. Sold house 403 on account for $280,000

Requirements:

Problem 1. Calculate the company's predetermined overhead rate for the year.

Problem 2. Prepare the journal entries to record the events in the general journal.