Reference no: EM133062374
Discussion Questions
1. The production of 100 cartons of cans of soft drinks could be costed as part of a job costing system or a process costing system. Do you agree? Explain.
Exercises
Question 1. Winc Pty Ltd bases its predetermined overhead rate on direct labour hours. Estimates and actual results for 2020 are shown below:
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Estimated overhead
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$150,000
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Actual overhead
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$110,000
|
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Estimated direct labour hours
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30,000
|
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Actual direct labour hours
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20,500
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Actual direct labour cost
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60,000
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Required: Actual direct labour cost 60,000
a) What is the predetermined overhead rate?
b) How much overhead would have been applied by Winc Pty Ltd to Work in Process during 2020?
c) What is the amount of underapplied or overapplied overhead at the end of 2020 for Winc Pty Ltd?
Problems
Question 1. Avaya uses a job costing system. The March cost data were as follows:
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Raw materials purchased on credit
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$ 400,800
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Direct labour costs
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417,250
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Raw materials issued to production
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368,030
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Actual manufacturing overhead costs
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319,680
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Cost of goods manufactured
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1,185,700
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|
Sales (all on credit)
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1,351,200
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Machine hours for March were 65,000 hours, and the business applies overhead to production at a rate of $6.00 per machine hour. The beginning raw materials inventory was $46,080. The beginning work in process inventory was $75,870. The beginning and ending finished goods inventories were $121,300 and $100,560 respectively.
Required:
a) Prepare general journal entries to record the March transactions.
b) Was overhead overapplied or underapplied for the month of March?
c) Calculate the ending balances of raw materials and work in process. (Hint: Prepare T accounts for inventories.)
Question 2. Swin Co. uses a job costing system, and manufacturing overhead is applied on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,200,000 of manufacturing overhead costs and use 60,000 machine hours.
Swin Co recorded the following events during the month of October.
(a) Beginning balances:
Raw materials inventory (RM): $150,000 Work in process inventory (WIP): $170,000 Finished goods inventory (FGs): $50,000
(b) Purchased 250,000 kilograms of raw materials on account. The cost was $5.00 per kilogram.
(c) Issued 200,000 kilograms of materials to production. Assume all materials issued are at
$5 per kilogram.
(d) Incurred $280,000 of direct labour costs and $60,000 of indirect labour costs.
(e) Recorded depreciation on equipment for the month, $23,000.
(f) Recorded $41,500 of insurance costs for the manufacturing property.
(g) Recorded $36,800 for utilities and other miscellaneous items for the manufacturing plant.
(h) Completed job B20 costing $190,000 and job B21 costing $790,000 during the month and transferred them to Finished Goods inventory account.
(i) Shipped job B21 to the customer during the month.
(j) Used 11,000 machine hours during October.
Required:
Complete the relevant T- accounts to show the flow of costs through the company's manufacturing accounts.