Eagle Carts, Inc., produces special-order golf carts, so Eagle Carts uses a job
ID: 2452215 • Letter: E
Question
Eagle Carts, Inc., produces special-order golf carts, so Eagle Carts uses a job order costing system. Overhead is applied at the rate of 90 percent of direct labor cost. A list of transactions for January follows:
Jan. 1
Purchased direct materials on account, $215,400.
2
Purchased indirect materials on account, $49,500.
4
Requested direct materials costing $193,200 (all used on Job X) and indirect materials costing $38,100 for production.
10
Paid the following overhead costs: utilities, $4,400; manufacturing rent, $3,800; and maintenance charges, $3,900.
15
Recorded the following gross wages and salaries for employees: direct labor, $120,000 (all for Job X); indirect labor, $60,620.
15
Applied overhead to production.
19
Purchased indirect materials costing $27,550 and direct materials costing $190,450 on account.
21
Requested direct materials costing $214,750 (Job X, $178,170; Job Y, $18,170; and Job Z, $18,410) and indirect materials costing $31,400 for production.
31
Recorded the following gross wages and salaries for employees: direct labor, $132,000 (Job X, $118,500; Job Y, $7,000; Job Z, $6,500); indirect labor, $62,240.
31
Applied overhead to production.
31
Completed and transferred Job X (375 carts) and Job Y (10 carts) to finished goods inventory; total cost was $855,990.
31
Shipped Job X to the customer; total production cost was $824,520 and sales price was $996,800.
31
Recorded these overhead costs (adjusting entries): prepaid insurance expired, $3,700; property taxes (payable at year end), $3,400; and depreciation—machinery, $15,500.
1. Record the entries for all transactions in January using T accounts below. Enter the transactions in chronological order. In case two transactions of the same date should be recorded using the same T account, enter them in the same order they are provided in the list of transactions. Assume no beginning inventory balances. Also assume that when the payroll was recorded, entries were made to the Payroll Payable account.
Prepare job order cost cards for Job X, Job Y, and Job Z to determine the following costs. When computing the product unit cost for Job X and Job Y, round to the nearest cent, if required.
Job X
Job Y
Job Z
Direct materials
$
$
$
Direct labor
$
$
$
Overhead
$
$
$
Total cost
$
$
$
Product unit cost
$
$
2. Compute the amount of underapplied or overapplied overhead as of January 31 and transfer it to the Cost of Goods Sold account.
Underapplied overheah $
Cost of good sold $
Overhead $
Jan. 1
Purchased direct materials on account, $215,400.
2
Purchased indirect materials on account, $49,500.
4
Requested direct materials costing $193,200 (all used on Job X) and indirect materials costing $38,100 for production.
10
Paid the following overhead costs: utilities, $4,400; manufacturing rent, $3,800; and maintenance charges, $3,900.
15
Recorded the following gross wages and salaries for employees: direct labor, $120,000 (all for Job X); indirect labor, $60,620.
15
Applied overhead to production.
19
Purchased indirect materials costing $27,550 and direct materials costing $190,450 on account.
21
Requested direct materials costing $214,750 (Job X, $178,170; Job Y, $18,170; and Job Z, $18,410) and indirect materials costing $31,400 for production.
31
Recorded the following gross wages and salaries for employees: direct labor, $132,000 (Job X, $118,500; Job Y, $7,000; Job Z, $6,500); indirect labor, $62,240.
31
Applied overhead to production.
31
Completed and transferred Job X (375 carts) and Job Y (10 carts) to finished goods inventory; total cost was $855,990.
31
Shipped Job X to the customer; total production cost was $824,520 and sales price was $996,800.
31
Recorded these overhead costs (adjusting entries): prepaid insurance expired, $3,700; property taxes (payable at year end), $3,400; and depreciation—machinery, $15,500.
Explanation / Answer
1)
Date Particulars JF Debit Credit
Jan 01, Raw Materials Inventory A/c $215,400
To Accounts Payable A/c $215,400
(Being the purchase of Direct inventory has recorded)
Jan 02, Raw Materials Inventory A/c $49,500.
To Accounts Payable A/c $49,500.
(Being the purchase of inDirect inventory has recorded)
Jan4 Work in process Inventory A/c Dr $193,200
Factory Overhead A/c Dr $38,100
To Raw materials Invemtory A/c $231,300
(Both Direct and indirect materials used for production has recorded)
jan 10, UtilitiesA/c Dr $4,400;
Manufacturing rent, A/c Dr $3,800;
Maintenance charges, A/c Dr $3,900.
To Cash A/c $12,100
(Being recording factory overhead cost)
Jan 15, Direct Wages A/c Dr $120,000
Indirect Salaries A/c Dr $60,620.
To Cash a/c $180,620
(Being Salary and wages to be paid has recorded)
Jan 15, Working Process A/c Dr $108,000
To Manufacturing Overhead A/c $108,000
($120,000 *90/100=$108,000)
(Being overhead to production has recorded)
Jan 19 , Raw Materials Inventory A/c $218,000
To Accounts Payable A/c $218,000
($190,450 + $27,550=$218,0000
(Being the purchase direct and inDirect inventory has recorded)
Jan 21 Work in process Inventory A/c Dr $214,750
Factory Overhead A/c Dr $31,400
To Raw materials Invemtory A/c $246,150
(Both Direct and indirect materials used for production has recorded)
Jan 31 , Direct Wages A/c Dr $132,000
Indirect Salaries A/c Dr $62,240
To Cash a/c $194,240
( $132,000 + $62,240 = $194,240)
(Being Salary and wages to be paid has recorded)
Jan 31,Working Process A/c Dr $118,800
To Manufacturing Overhead A/c $118,800
( $132,000*90/100=$118,800)
(Being overhead to production has recorded)
Jan 31, Finished goods Inventory A/c Dr $855,990.
To Working in Process Inventory A/c $855,990.
(Being transferred to finished goods has recorded)
Jan 31 Cost of Goods Sold A/c Dr $824,520
To Finished Goods A/c $824,520
(Being Cost of goods sold has recorded)
Jan 31, Accounts Receivable A/c Dr $996,800
To Sales A/c $996,800
(Being goods shipped to customer has recorded)
Jan 31 , Prepaid insurance a/c dr $3,700;
To Cash A/c $3,700
(Being insurance paid has recorded)
Note: Depreciation and tax not for january it for full year so it has excluded for jan month calculation.
_______________________________________________________________________________________
2)
Particulars Job X Job Y Job Z
Direct materials $193,200+ $178,170=$371,370 : $18,170; $18,410
Direct labor $120,000 +$118,500 =$238,500 ; $7,000; $6,500
Overhead $108,000+ $106,650 =$214,650 : $6,300 : $5,850
Total Cost= $824,520 : $31,470 $30,760
Unit cost $1.35 $1.25
_______________________________________________________________
Calcualtion:
$824,520 / $609 ,870($371,370 + $238,500) = $1.35
$31,470 = $25,170($18,170; + $7,000=$1.25
(Job X, $118,500 * 90/100 = $106,650
Job Y, $7,000 *90/100= $6,300);
Z=, $6,500 * 90/100 =$5,850
__________________________________________________________________________
2) Over applied = $238,500 + $7,000+ $6,500=$252,000(labor)
Underr applied = $214,650 + $6,300 + $5,850 =$226,800(ovehead)
____________________________________________________________________
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