4-38 Overview of general ledger relationships. Brandon Company uses normal costi
ID: 2423037 • Letter: 4
Question
4-38 Overview of general ledger relationships. Brandon Company uses normal costing in its job-costing
system. The company produces custom bikes for toddlers. The beginning balances (December 1) and ending
balances (as of December 30) in their inventory accounts are as follows:
Beginning Balance 12/1 Ending Balance 12/31
Materials Control $2,100 $ 8,500
Work-in-Process Control 6,700 9,000
Manufacturing Department Overhead Control — 94,000
Finished Goods Control 4,400 19,400
Additional information follows:
a. Direct materials purchased during December were $66,300.
b. Cost of goods manufactured for December was $234,000.
c. No direct materials were returned to suppliers.
d. No units were started or completed on December 31 and no direct materials were requisitioned on
December 31.
e. The manufacturing labor costs for the December 31 working day: direct manufacturing labor, $4,300, and
indirect manufacturing labor, $1,400.
f. Manufacturing overhead has been allocated at 110% of direct manufacturing labor costs through
December 31.
-----------------------
1. Prepare journal entries for the December 31 payroll.
2. Use T-accounts to compute the following:
a. The total amount of materials requisitioned into work in process during December
b. The total amount of direct manufacturing labor recorded in work in process during December (Hint:
You have to solve requirements 2b and 2c simultaneously)
c. The total amount of manufacturing overhead recorded in work in process during December
d. Ending balance in work in process, December 31
e. Cost of goods sold for December before adjustments for under- or overallocated manufacturing
overhead
3. Prepare closing journal entries related to manufacturing overhead. Assume that all under- or overallocated
manufacturing overhead is closed directly to Cost of Goods Sold.
Explanation / Answer
Ans:
1. entries for 12/31 payroll
a) work in process control $4300
Manufacturing deptt overhead control 1400
wages payable control $5700
b) work in process control 4,730
Manufacturing overhead $4730
( being 110% of labor cost $4300)
2) T - accounts
Materila control
Beginnig bal $2100 materials requistioned $59,900
Purchases 66,300
Bal closing 6,500
Work in process control
beginning bal $6700 cost of goods manufactured 234,000
direct materials $59,900
Direct labor 84,000
MOH 92,400 236,300
balance closing 9,000
We know that manufacturing overhead is 1.1 of labor . Therefore when given allocated overhead is $92,400 then direct labor $84,000
for calculating this we need following equation
$6700 + $59,900 + x + 1.1x- 234,000 = $9000
x== $84,000
x is direct labor and 1.1x is moh
b) total direct manufacturing labor for dec = $84,000 + $4300 = $88,300
c) Total manufacturing overhead allocated for dec= $92,400 + $4730= $97,130
d) ending bal in WIP inventory on dec 31 = $9000 + $4300 + 4730 = $18,030
3) Cost of goods manufactured = $234,000
Add: beginning finished goods 4,400
Cost of goods available for sale 238,400
Less: Ending finished goods 19,400
unadjusted cost of goods sold 219000
Add: underapplied overhead( 94000- 92400) 1600
Cost of goods sold $220,600
Entry Cost of goods sold $1600
Manufacturing overhead $1600
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