Reference no: EM133114667
Question - Dream Makers is a small manufacturer of gold and platinum jewelry. It uses a job costing system that applies overhead on the basis of direct labor hours. Budgeted factory overhead for the year was $642,600, and management budgeted 42,000 direct labor-hours. The company had no Materials, Work-in-Process, or Finished Goods Inventory at the beginning of April. These transactions were recorded during April:
1. April insurance cost for the manufacturing property and equipment was $2,650. The premium had been paid in January.
2. Recorded $1,620 depreciation on an administrative asset.
3. Purchased 21 pounds of high-grade polishing materials at $16 per pound (indirect materials).
4. Paid factory utility bill, $7,190, in cash.
5. Incurred 4,000 hours and paid payroll costs of $160,000. Of this amount, 1,000 hours and $20,000 were indirect labor costs.
6. Incurred and paid other factory overhead costs, $6,780.
7. Purchased $33,000 of materials. Direct materials included unpolished semiprecious stones and gold. Indirect materials included supplies and polishing materials.
8. Requisitioned $27,000 of direct materials and $3,300 of indirect materials from Materials Inventory.
9. Incurred miscellaneous selling and administrative expenses, $8,040.
10. Incurred $5,290 depreciation on manufacturing equipment for April.
11. Paid advertising expenses in cash, $3,925.
12. Applied factory overhead to production on the basis of direct labor hours.
13. Completed goods costing $72,500 during the month.
14. Made sales on account in April, $77,980. The Cost of Goods Sold was $62,140.
Required -
1. Compute the firm's predetermined factory overhead rate for the year.
2. Prepare journal entries to record the April events.
3. Calculate the amount of overapplied or underapplied overhead on April 30.
4. Prepare a schedule of Cost of Goods Manufactured and a schedule of Cost of Goods Sold.
5. Compute the amount of overapplied or underapplied overhead that should be prorated to Work-in-Process, Finished Goods, and Cost of Goods Sold.
5. Prepare the income statement for April.
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