90.2K

Verified Solution

Link Copied!

Compute the Job cost record. (Please no handwritten responses)

PROBLEM #2 Objective This part of the problem set is designed to enhance your understanding of job-order costing and accounting for transactions associated with the process of manufacturing a product Background Ly's building was ready for production on September 1. In September an order was received from a local outdoor store and another order from a big box store. September production also includes at least one job that will begin to build inventory for the coming season. Economic Activity On September 1" Lynn began production on his first job. Throughout September, jobs were scheduled as follows: Job Job 1 Job 2 Job 3 Date Started 9/2/2019 9/5/2019 9/16/2019 Description 1,800 16 OZ water bottles for a local outdoor store 7.200 8 oz water bottles for inventory (stock) 10.000 16 oz water bottles with logo for a national retailer Lynn has decided to allocate manufacturing overhead on the basis of machine hours. Estimated overhead costs totaled 5665,000 for the year and 350,000 machine hours were estimated for the same time period. The four individuals that will work in the plant will all be paid the same rate: $21.00 per hour. The current model of water bottles requires only two direct materials: the aluminum pucks that will be molded into the water bottles, and the plastic lids that will be purchased in bulk from a manufacturer that specializes in lids. Figure 2 shows the direct materials that will be used. Figure 2: Water Bottle Materials As Lynn's accountant, you note the water bottles will be manufactured in individual and identifiable jobs so you set up a job-order costing system to record and process the costs of production. The costs of each job will be recorded in a separate job cost record that will serve as a subsidiary leder for the general journal entries that will be made to record the business' transactions. Information specific to the three jobs is presented below. The information in the tables should be entered into the job cost record for each job and a journal entry using the summary information (marked with a check) should be recorded in the general journal provided in PACKET 2. Company records show the following direct materials requisitions: 9/2/19: Material totaling $7,323 was requisitioned for Job I. Detail regarding the material is as follows: Description Lids Aluminum Pucks Quantity 1,800 1.810 Unit Cost 0 75 cach 30 KG | Total $1,350 $5.973 9/5/19: Material totaling $19,814 was requisitioned for Job 2. Detail regarding the material is as follows: Description Lids Aluminum Pucks Quantity 7,200 7,207 Unit Cost $0.75 each $2.00 each Total $5,400 $14,414 9/16/19 Material totaling 533,033 was requisitioned for Job 3. Detail regarding the material is as follows: Description Aluminum Pucks Quantity 10.0101 Unit Cost $330 each Total $33,033 Company records show the following direct labor costs: 9/15/19 Payroll costs of $6,090 for the pay period ending 9/15 were recorded but not paid. 9/30/19 Payroll costs of 56,195 for the pay period ending 9/30 were recorded but not paid. A summary of labor time records shows the following direct labor cost for each job: Job I Dates 9/1 through 9/15 Total Hours 70 hours Hourly Wage Rate $21.00 Total $1,470 Job 2 Dates 9/1 through 9/15 9/15 through 9/30 Total Hours 220 hours 15 hours Hourly Wage Rate $21.00 $21.00 Total 34.620 S315 Job 3 Dates 9/16 through 9/30 Total Hours 280 hours Hourly Wage Rate $21.00 Total $5,880 Overhead is allocated to each job on the date of its completion or the end of the month, whichever comes first. Job 1 was completed on 9/15, Job 2 was completed on 9/20 and Job 3 was still in process at the end of the month. Information presented below shows machine hours used for each job! A total of 27,900 machine hours were used in the month of September. Each date listed below requires a separate journal entry and also an entry in the job cost record Job N Job 1 Job 2 Date MOH is Allocated 9/15/19 9/20/19 9/30/19 Machine Hours Used 3,100 10.200 14.600 Part A: Preparing job cost records Required: Using the information presented above compute the predetermined overhead rate for 2019 and complete the job cost records in Packet 2. Part B: Recording direct material, direct labor and overhead costs in the general journal. Required: Make debit and credit journal entries in the General Journal in Packet 2 to record the 1) materials, 2) labor and 3) manufacturing overhead amounts. For material and labor, use the summary amounts above that are marked with a and shown above. You will have to use the machine hours shown above and multiply them by the predetermined overhead rate (already computed on the job cost record) in order to get the amounts for the journal entries (three) for MOH. You do not have to provide explanations for the journal entries. The first entry has been provided as an example. Note: Journal entries are typically presented in chronological order. For this part of the problem, it will be easier to make all the entries that pertain to the costs of production (product costs) in Part B and then make the entries presented in Part C below. Part C: Recording other transactions in the general journal. Required: Record the transactions listed below in the General Journalin Packet 2. Sept 1, 2019 Aluminum pucks, lids and indirect materials were purchased on account for $102,000, delivered, and placed into storage. Sept 6, 2019 Raw materials with a cost of $1,300 were requisitioned for use and moved to the plant production area. The materials were all indirect materials. Sept 15, 2019 Job I was completed and moved to finished goods storage. Hint: The cost of the completed job is on the job cost record for Job 1. Sept 18, 2019 Job I was sold on account for a price of $19.00 per water bottle. Hint: Remember to make two journal entries: one to record the sale and one to record the cost of the sale. Sept 19, 2019 Lynn attended a regional trade show to promote Wonderful Water bottles. The cost of travel to, and registration for the show was $2,150. The cost of the trip was paid in cash. Job 2 was completed and transferred into the finished goods storage area. Sept 20, 2019 Sept 21, 2019 Wages payable for the pay period ending on 9/15 were paid in cash. Hint: Look at the journal entry to record direct labor that you made on 915 in Part B. Sept 28, 2019 The firm received a $17,000 plant utility bill that will be paid at a later date. Sept 30, 2019 Lynn was paid a salary of $4,200 in cash (85% related to administrative activities and 15% related to his work in the water bottle manufacturing facility). Sept 30, 2019 Depreciation on the plant building and equipment of $35,000 was recorded for the month of September Part D: Posting to Ledger Accounts. Required: Post the entries you recorded in Parts B and C to the T-accounts in Packet 2. Note that you need only post amounts to the six T-accounts listed in Packet 2. so you won't always post both a debit and a creant. Balance the work in process (WIP) and finished goods (FG) inventory accounts and cost of goods sold and verify that the cost of Job 3 shown on the job cost report is equal to the balance in work-in-process inventory, that the cost of Job 2 shown on the job cost report is equal to the balance in finished goods inventory, and the cost of job 1 is equal to the amount in the cost of goods sold T-account (before adjustment for under-or over- allocated overhead). This should make sense since Job I was finished and sold; Job 2 was finished but not sold, and Job 3 was not finished. Part E: Compute the balance in the manufacturing overhead T-account. Record a journal entry dated 9/30 in the General Journal in Packet 2 to close the MOH account and adjust cost of goods sold for under or over- allocated overhead. Post the entry to the appropriate T-accounts and balance COGS Part F: Prepare the September income statement for Wonderful Water Bottles in the space provided in Packet 2. PROBLEM #2 Part A Show the formula and compute the predetermined overhead rate for Wonderful Water Bottles Complete the job cost records for jobs 1-3 using the information in Packet 1. Be sure you identify cach type of material and each labor pay period separately for each job. Also show the computation of the allocated overhead as well as the total amount of overhead assigned to each job. Round cost per unit to the nearest cent. Job Cost Record Job Number: Customer: Job Description Date Started Date Completed: Cost Summary Manufacturing Cost Information Direct Materials: Direct Labor: Manufacturing Overhead: Total Job Cost Number of Units Cost per Unit Job Cost Record Job Number: Customer Job Description Date Started Date Completed: Cost Summary Manufacturing Cost Information Direct Materials: Direct Labor Manufacturing Overhead: Total Job Cost Number of Units Cost per Unit Job Cost Record Job Number: Customer Job Description_ Date Started Date Completed: Cost Summary Manufacturing Cost Information Direct Materials: Direct Labor: Manufacturing Overhead: Total Job Cost Number of Units Cost per Unit N/A

Answer & Explanation Solved by verified expert

See Answer