4 (of 6) 4. value: 2.00 polnts Dillon Products manufactures various machined par

Question

4 (of 6) 4. value: 2.00 polnts Dillon Products manufactures various machined parts to customer specifications. The company uses a job- order costing system and applies overhead costs to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,245,000 in manufacturing overhead cost at an activity level of 566,000 machine-hours spent the entire month of January working on a large order for 8,200 custom made The machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow a. Raw materials purchased on account, $316,000 b Raw materials requisitioned for production, S258 000 80% direct and 20% indirect) c. Labor cost incurred in the factory, $159,000, of which $53,000 was direct labor and $106,000 was indirect labor d. Depreciation recorded on factory equipment, $63,200 e. Other manufacturing overhead costs incurred, $84,800 (credit Accounts Payable) f Manufacturing overhead cost was applied to production on the basis of 40,960 machine-hours actually worked during the month g. The completed job was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead.) Required: 1. Prepare jourmal entries to record items (a) through (0 above. [Ignore item (g) for the moment (If no t account entry is required for a transactionleven t, select "No journal entry required" in the first field. Do not round intermediate calculations.) View transaction list View journal entry worksheet No Transaction General Journal Debit Credit Raw materials 316,000

Explanation / Answer

Oh rate per Machine Hour: Estimated manufacturing OH 4245000 Divide: Estimated MH 566000 Oh rate per MH 7.5 Journal entries: S.no. Accounts title and explanations Debit $ Credit $ a. Raw material Inventory Dr. 316000     Accounts payable 316000 b. Work in Process ivnentory Dr. 206400 Manufacturing Overheads Dr. 51600      Raw material inventory 258000 c. Work in Process ivnentory Dr. 53000 Manufacturing Overheads Dr. 106000         Wages and salaries payable 159000 d. Manufacturing Overheads Dr. 63200         Accumulated depreciation 63200 e. Manufacturing Overheads Dr. 84800       Accounts payable 84800 f. Work in Process Inventory Dr. 307200       Manufacturing Overheads (40960*7.50) 307200 g. Finished Goods inventory Dr. 566600      Work in process inventory 566600 (206400+53000+307200) MANUFACTURING OVERHEADS Indirect Material 51,600 OH applied 307,200 Indirect Labour 106,000 Accumulated Dep 63,200 Accounts payable 84,800 Ending balance 1600 Work in Process Inventory Balance 0 Finished Goods inv. 566,600 Raw material Inv. 206,400 Wages Payable 53,000 Manufacturing Overheads 307,200 Balance 0 g. Finished Goods inventory Dr. 566600      Work in process inventory 566600 (206400+53000+307200) Req 4. Total cost of Job 566600 Divide: Number of Units produced 8200 Cost per unit 69.1

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