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Chapter 17: Q2SE (page 939)

Back Country manufactures backpacks. Its plant records include the following materials-related data

Journalize the entries to record the transactions, post to the Raw Materials Inventory account, and determine the ending balance in Raw Materials Inventory.

Short Answer

Expert verified

Date

Particulars

Debit ($)

Credit ($)

1.

Raw material inventory

73,200

Accounts payable

73,200

(To record the purchase of raw material)

2.

Work in process inventory

59,000

Manufacturing overhead

450

Raw material inventory

59,450

(To record material used)

The year ending balance in raw material inventory is $51,750

Step by step solution

01

Raw material inventory purchased

02

The year ending balance in raw material inventory

Particulars

Amount ($)

Beginning balance

38,000

Account payable

73,200

Less: Work in process inventory

(59,000)

Less: Manufacturing overhead

(450)

Ending balance

51,750

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Most popular questions from this chapter

Question: The following information pertains to Smith Company for the year:

Estimated manufacturing overhead

\(500,000

Actual manufacturing overhead

\)550,000

Estimated direct labor hours

10,000 hours

Actual direct labor hours

10,500 hours

13. Calculate the predetermined overhead allocation rate using direct labor hours as the allocation base.

14. Determine the amount of overhead allocated during the year. Record the journal entry.

15. Determine the amount of underallocated or overallocated overhead. Record the journal entry to adjust Manufacturing

Overhead.

What is an allocation base? Give some examples

The manufacturing records for Sporty Kayaks at the end of the 2018 fiscal year show the following information about manufacturing overhead:

Overhead allocated to production

\(409,200

Actual manufacturing overhead cost

432,000

Predetermined overhead allocation rate

\)44 per machine hours

Requirements

2. Was manufacturing overhead overallocated or underallocated for the year, and by how much?

Explain the terms accumulate, assign, allocate, and adjust as they apply to job order costing.

Superior Construction, Inc. is a home builder in Arizona. Superior uses a job order costing system in which each house is a job. Because it constructs houses, the company uses an account titled Construction Overhead. The company applies overhead based on estimated direct labor costs. For the year, it estimated construction overhead of \(1,150,000 and total direct labor costs of \)5,750,000. The following events occurred during August:

a. Purchased materials on account, \(400,000.

b. Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned.

Direct material

Direct Labor

House 402

\)58,000

\(44,000

House 403

62,000

32,000

House 404

61,000

58,000

House 405

86,000

57,000

c. The company incurred total wages of \)300,000. Use the data from Item b to assign the wages. Wages are not yet paid.

d. Depreciation of construction equipment, \(6,700.

e. Other overhead costs incurred: Equipment rentals paid in cash, \)30,000; Worker liability insurance expired, \(7,000.

f. Allocated overhead to jobs.

g. Houses completed: 402, 404.

h. House sold on account: 404 for \)250,000.

Requirements

1. Calculate Superior鈥檚 predetermined overhead allocation rate for the year.

2. Prepare journal entries to record the events in the general journal.

3. Open T-accounts for Work-in-Process Inventory and Finished Goods Inventory.

Post the appropriate entries to these accounts, identifying each entry by letter.

Determine the ending account balances, assuming that the beginning balances

were zero.

4. Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work-in-Process Inventory account.

5. Add the costs of the completed house that has not yet been sold, and show that this equals the ending balance in Finished Goods Inventory.

6. Compute gross profit on the house that was sold. What costs must gross profit

cover for Superior Construction?
See all solutions

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