Reference no: EM132662678

Question - Process costing - journalising transactions

Hotbox ltd produces pizza boxes using two processes - cutting and packaging. The production budget for the year ending 30 June 2013 estimated raw materials use of $400,000, factory overhead of $270000 direct labor costs of 190000 and 168750 machines hours.

During April 2013, the following transactions were recorded:

1. Raw materials transferred to cutting 21600

Raw materials transferred to packaging 28000

2. Direct labor costs incurred by cutting 15800

Direct labor costs incurred by packaging 20200

3. Machine hours used by cutting 13800 hours

Machine hours used by packaging 17600

4. Other production costs for April were:

Factory supplies 25400

Depreciation 16500

Repairs 6200

Insurance 1700

5. Product with an assigned cost of 61400 was transferred from cutting to packaging.

6. Overhead was applied in each department based on Machine hours used. (A predetermined rate based on estimated overhaeds and total Machine hours over both departments is to be calculated).

7. Raw material purchase were 56000

8. Goods with an assigned cost of 136000 were transferred from packaging to finished goods.

9. Finished goods with an assigned cost of 140000 were sold on credit for 162000.

10. Beginning inventory as at 1st April comprised the following amounts.

Raw materials 17500

Work in process- cutting 18400

Work in process - packaging 21800

Finished goods- 14000

Required -

A. Prepare journal entries to record the April transactions. Assume all expenses were paid in cash. Use factory overhead and factory overapplied accounts.

B. Calculate ending work in process and finished goods balances each process.

C. Was overheard underapplied or overapplied in April? By what amount?