Read the following scenario and answer the questions. Your manufacturing company

Question

Read the following scenario and answer the questions. Your manufacturing company incurs several costs to make the finished product, which are cans of cco-friendly paint. You purchase 100 empty cans at $2.00 cach and 200 labels for the cans of paint at S1.00 cach. You have two employces who bottle the paint into the cans and one additional employee who places a label on each can. You take a printout from your clock where the employees have entere their time and find that the wages due to these three employces is $2,000.00. You must also pay payroll taxes in the amount of S140.00 total for these three employees. A number of other costs must be taken into consideration as well: depreciation on the factory machine of $150.00, utilities of $200.00, prepaid insurance of $600.00, and property taxes on your building of $2,000.00. 1. Prepare the journal entries to record the purchase of the raw materials, the labor incurred, and the overhcad incurred 2. Assume that $100.00 of the raw materials and S1,000.00 of the indirect materials were used. Prepare the journal entries to assign these materials to the jobs and overhead. 3. Of the $2,140.00 in factory labor, $500.00 was attributed to indirect labor costs. Prepare the journal entry to assign the labor to jobs and overhead. 4. You determine that direct labor cost is the activity base for determining the predetermined overhead rate. The following information is known about the estimated annual costs: . overhead costs: $18,000.00 - direct labor costs: $25,000.00 What is the predetermined overhead rate? What is the journal entry to assign overhead to jobs? . Prepare the journal entry to transfer costs to Finished Goods. . A sale of the goods takes place. The goods are sold for $5,000.00. Prepare the journal entry to record this sale.

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4.

1 Account Debit Credit a Raw Material-Empty Cans Inventory 200 100*2 Raw Material-Labels Inventory 200 200*1 Accounts Payable 400 (purchase of raw material) b Factory Labor 2140 Factory Wages payable 2000 Payroll Tax payable 140 (Labor incurred recorded) c Manufacturing Overhead 2950 Accumulated Depreciation 150 Accounts Payable (200+600+2000) 2800 (Overhead incurred) 2 Work in process 100 Raw Material Inventory 100 (Direct Material Assigned) Overhead 1000 Raw Material Inventory 1000 (InDirect Material Assigned) 3 Work in process 1640 Factory Labor 1640 (Direct Labor Assigned) Overhead 500 Factory Labor 500 (InDirect Labor Assigned)

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