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Makovka662 [10]
2 years ago
12

Rock industries allocates manufacturing overhead at a predetermined rate of 160% of direct labor cost. Any overallocated or unde

rallocated overhead is closed to the cost of goods sold at the end of the month. Below is information on job 205 that was in process at the end of the month of October.
Direct materials $4,000
Direct labor $3,000
Allocated manufacturing overhead $4,800

Jobs 206, 207, and 208 were started in November. Direct materials that were used in November were $26,000 and direct labor costs were $21,000. For the month of November, actual manufacturing overhead was $32,000. The only job still in process on the last day of November was job 104withthe following costs: $3,000 for direct materials and $1,500 for direct labor.

Required:
a. Calculate the cost of goods manufacturered for November.
b. Prepare the journal entries to record the current month activity.
c. Calculate the amount of overallocated or underallocated manufacturing overhead. Be sure to label the answer as either overallocated or underallocated.
d. Prepare the accounting entries to close the overallocated or underallocated manufacturing overhead on November 30?
Business
1 answer:
nadya68 [22]2 years ago
4 0

Answer:

<u>Cost of goods manufactured for November.</u>

Manufacturing Schedule Cost

Beginning Inventory (Job 205)                $11,800

Direct materials                                       $26,000

Direct labor costs                                     $21,000

Applied Overheads ($21,000 x 160%)    $33,600

Less Ending Inventory (Job 104)            ($6,900)

Cost of Goods Manufactured                 $85,500

<u>Journal entries to record the current month activity.</u>

Debit : Work In Process $80,600

Credit : Direct materials                                       $26,000

Credit : Direct labor costs                                     $21,000

Credit : Applied Overheads ($21,000 x 160%)    $33,600

<u>Calculation of amount of over allocated or under allocated manufacturing overhead</u>

Actual Manufacturing Overheads = $32,000

Applied Manufacturing Overheads = $33,600

Therefore, Overheads Over-applied = $1,600

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Answer:

A.Earnings at normal rate(1)= $ 460,000.00

Total earnings(3) = $540,000

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Dr OfficeSalaries $ 120,000.00

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Explanation:

In order for us to calculate the ommited in (1) we have to find out the (3) calculated as :

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Therefore let x be the total earnings using 6%

x*6%= $32,400

x= $32,400/6%

= $ 540,000.00

Or let x be the total earnings using 1.5%

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$ 540,000.00

The total earnings for 3 will be = $540,000

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Let plug in the formula

$540000-$80000= $ 460,000.00

Therefore earnings at normal rate for (1)= $460,000.00

In order to calculate for 8,we have to substract the total deductions form taxes and insurances

Using this formula

Total deductions=social security +medicare+income tax held+union dues+medical insurance

Hence,

$201150=$32400+$8100+$135000+$18900+union dues

Union dues(8)=$201150-32400-8100-135000-18900

Union dues(8)= $ 6,750.00

In order to calculate for 12 sales salaries,we have to deduct total earnings from factory wages and office salaries

Using this formula

Sales salaries=total earnings -factory wages and office salaries

Sales

salaries(12)=$540000-$285000-$120000

sales salaries(12)= $ 135,000.00

Therefore:

Earnings at normal rate(1)= $ 460,000.00

Total earnings(3) = $540,000

Union dues(8)= $ 6,750.00

Sales salaries(12)= $ 135,000.00

B. Journalising the entry to record payroll

Dr FactoryWages $ 285,000.00

Dr OfficeSalaries $ 120,000.00

Dr SalesSalaries $ 135,000.00

Cr Ss tax $ 32,400.00

Cr Mc tax $ 8,100.00

Cr Income tax withheld $ 135,000.00

Cr Medical insurance $ 18,900.00

Cr Uniondues $ 6,750.00

Cr Wages accrued and payable $ 338,850.00

(being the payroll recorded)

C.Dr wages accrued and payable $ 338,850.00

Cr Cash $ 338,850.00

(Being the payment made to staff)

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