Reference no: EM132849590
Question - Watkins Machinery Company uses a normal job costing system. The company has the following partial trial balance information for March, the last month of its fiscal year:
Materials inventory (X, $4,500; Y, $3,000; Indirect materials, $7,500) $15,000
Work-in-process inventory (this is Job 101) 8,400
Finished goods inventory (this is Job 100) 14,000
These transactions relate to the month of March:
-Purchased direct materials and indirect materials with the following summary of receiving reports:
Material X $15,000
Material Y 15,000
Indirect materials 7,500
Total $37,500
-Issued direct materials and indirect materials with this summary of requisitions:
Job 101 Job 102 Total
Material X$7,500 $4,500 $12,000
Material Y6,000 3,000 9,000
Subtotal $13,500 $7,500 $21,000
Indirect materials 12,000
Total $33,000
-Factory labor incurred is summarized by these time tickets:
Job 101 $16,800
Job 102 11,200
Indirect labor 7,500
Total $35,500
-Factory utilities, factory depreciation, and factory insurance incurred is summarized as follows:
Utilities $750
Depreciation 22,500
Insurance 3,750
Total $27,000
-Factory overhead costs were applied to jobs at the predetermined rate of $15 per machine hour. Job 101 incurred 1,800 machine hours; Job 102 used 1,200 machine hours.
-Job 101 was completed; Job 102 was still in process at the end of March.
-Job 100 and Job 101 were shipped to customers during March. Both jobs had gross margins of 20% based on manufacturing cost.
-The company closed the overapplied or underapplied overhead to the Cost of Goods Sold account at the end of March.
Required -
1. Prepare journal entries to record the transactions for the events from parts (a) through (g).
2. Compute the ending balance of the Work-in-process inventory account.
3. Compute the overhead variance and indicate whether it is overapplied or underapplied.
4. Close the overhead variance to the Cost of goods sold account.