Answer:
Broomhilda
a. Predetermined overhead rate = overhead costs/direct labor costs
= $840,000/$700,000
= $1.20 per direct labor cost
b. Job Cost Sheets for Job 50 Job 51 Job 52
Beginning balances:
Direct materials $20,000
Direct labor $12,000
Manufacturing overhead $16,000
c. Journal Entries for the purchase of raw materials and manufacturing overhead costs:
Debit Raw materials $90,000
Credit Accounts Payable $90,000
To record the purchase of raw materials on account.
Debit Manufacturing overhead $65,000
Credit Raw materials $17,000
Credit Wages $20,000
Credit Depreciation expense $12,000
To record the manufacturing overhead incurred.
d. Debit Job 50 $21,000
Credit Raw materials $10,000
Credit Direct labor $5,000
Credit Manufacturing overhead $6,000
To record the assignment of direct materials, direct labor, and manufacturing overhead costs to Job 50.
Debit Job 51 $94,000
Credit Raw materials $39,000
Credit Direct labor $25,000
Credit Manufacturing overhead $30,000
To record the assignment of direct materials, direct labor, and manufacturing overhead costs to Job 51
Debit Job 52 $74,000
Credit Raw materials $30,000
Credit Direct labor $20,000
Credit Manufacturing overhead $24,000
To record the assignment of direct materials, direct labor, and manufacturing overhead costs to Job 52
e. Job Cost Sheets for Job 50 Job 51 Job 52
Beginning balances:
Direct materials $20,000
Direct labor $12,000
Manufacturing overhead $16,000
Direct materials $10,000 $39,000 $30,000
Direct labor $5,000 $25,000 $20,000
Manufacturing overhead $6,000 $30,000 $24,000
Total $69,000 $94,000
f. Debit Accounts Receivable $280,000
Credit Sales Revenue $280,000
To record the sale of goods (Jobs 49 and 50 for $122,000 and $158,000, respectively).
Debit Cost of Goods Sold $159,000
Credit Job 49 $90,000
Credit Job 50 $69,000
To record the cost of goods sold for Jobs 49 and 50.
g. Finished Goods Inventory balance = $94,000
This balance consists of Raw materials $39,000, Direct labor $25,000, and Manufacturing overhead $30,000 for Job 51.
h. The amount of over-or underapplied overhead:
Overhead incurred = $65,000
Overhead applied = $60,000
Underapplied = $5,000
Debit Cost of Goods Sold $5,000
Credit Manufacturing overhead $5,000
To close the underapplied overhead to the cost of goods sold.
Explanation:
Jobs 50 costs prior to September:
direct materials $20,000,
direct labor $12,000, and
manufacturing overhead $16,000
Total costs so far = $$48,000
Job 49 completed at a cost of $90,000
Beginning balance of Raw Materials Inventory = $15,000
Started Jobs 51 and 52, completed Jobs 50 and 51
Sold Jobs 49 and 50 on account for $122,000 and $158,000, respectively.
Additional events:
Raw materials purchased on account = $90,000
Manufacturing overhead incurred:
indirect materials $17,000
indirect labor $20,000
depreciation expense on equipment $12,000
Various manufacturing overhead = $16,000
Total = $65,000
Assignment of direct materials and direct labor to jobs:
Job no. Direct Materials Direct Labor Manufacturing overhead
50 10,000 5,000 $6,000
51 39,000 25,000 $30,000
52 30,000 20,000 $24,000
Estimated total manufacturing overhead costs = $840,000
Estimated direct labor costs = $700,000
Predetermined overhead rate = overhead costs/direct labor costs
= $840,000/$700,000
= $1.20 per direct labor cost