WCP14 Waterways Corporation is a private corporation formed for the purpose of p
ID: 2570413 • Letter: W
Question
WCP14 Waterways Corporation is a private corporation formed for the purpose of providing the and the services needed to irrigate farms, parks, commercial projects, and private homes. It Waterways Continuing Problem products centrally located factory in a U.S. city that manufactures the products it markets to retail outlets nation t aiso maintains a dvision that provides instalation and waranty servicing in six The mission of Waterways is to manufacture quality parts that can be used for effective projects that also conserve water. By that effort, the company hopes to satisfy its customers rapid and responsible service, and serve the community and the employees who represent them community irrigation provide areas help the The company has been growing rapidly, so management is considering new ideas to company continue its growth and maintain the high quality of its products Waterways was founded by Will Winkman who is the company president and chief executive officer (CEO). Working with him from the company's inception was Will's brother, Ben, whose sprinkler designs and ideas about the installation of proper systems have been a major basis of the company's success Ben is the vice president who oversees all aspects of design and production in the company The factory itself is managed by Todd Senter who hires his line managers to supervise the factory employees. The factory makes all of the parts for the irrigation systems. The purchasing department is managed by Hector Hines. The installation and training division is overseen by vice president Henry Writer, who supervises the managers of the six local installation operations. Each of these local managers hires his or her own local service people. These service employees are trained by the home office under Henry Writer's direction because of the uniqueness of the company's products. There is a small Human Resources department under the direction of Sally Fenton, a vice president who handles the employee paperwork, though hiring is actually performed by the separate departments. Sam Totter is the vice president who heads the sales and marketing area; he oversees 10 well-trained salespeople The accounting and finance division of the company is headed by Abe Headman, who is the chief financial officer (CFO) and a company vice president; he is a member of the Institute of Management Accountants and holds a certificate in management accounting. He has a small staff of Certified Public Accountants, including a controller and a treasurer, and a staff of accounting input operators who maintain the financial records A partial list of Waterways' accounts and their balances for the month of November 2012 follows ble $ 275,000 54,000 260,000 16,800 2,400 42,000 16,800 10,200 68,800 72,550 48,000 1,600 72,000 41,250 52,700 38,000 184,500 47,000 4,500 325,000 1,350,000 40,500 52,700 42,000 Cash Equipment Direct Labor Factory Supplies Used Factory Utilities Finished Goods Inventory, November 30 Finished Goods Inventory, October 31 Indirect Labor Office Supplies Expense Other Administrative Expenses Prepaid Expenses Raw Materials Inventory, November 30 Raw Materials Inventory, October 31 Raw Materials Purchases Rent-Factory Equipment Repairs Factory Equipment Sales Sales Commissions Work In Process Inventory October 31 Work In Process Inventory, November 30Explanation / Answer
Answer (a)
JOB COST SHEET
Job Number J57
Quantity 237 units
Date Requested Dec 2
Date Completed Dec 15, 2012
Item special order parts
Direct
Direct
Manufacturing
Overhead
Date
Materials
Labor
Hours
Rate
Amount
2-Dec
$ 3,374
3-Dec
$ 66
2 1/2
$ 398*
$ 995
8-Dec
706
9-Dec
66
3
398
1,194
14-Dec
2,306
15-Dec
66
3
398
1,194
Cost Summary
Direct materials
$ 6,386
Direct labor
198
Manufacturing overhead
3,383
Total Cost
$ 9,967
Unit Cost ($9,967/237 units)
$ 42.05
*840,576 ¸ 2,112
JOB COST SHEET
Job Number K52
Quantity 142 units
Date Requested Dec 2
Date Completed Dec 15, 2012
Item special order parts
Direct
Direct
Manufacturing
Overhead
Date
Materials
Labor
Hours
Rate
Amount
2-Dec
$ 1,687
3-Dec
$ 33
2
$ 398*
$ 796
8-Dec
353
9-Dec
33
2
398
796
14-Dec
1,153
15-Dec
33
2
398
796
Cost Summary
Direct materials
$ 3,193
Direct labor
99
Manufacturing overhead
2,388
Total Cost
$ 5,680
Unit Cost ($5,680/142 units)
$ 40.00
*840,576 ¸ 2,112
(b)
GENERAL JOURNAL
DEBIT
CREDIT
12/1
Raw Materials Inventory
53,200
Accounts Payable
53,200
(Purchase of raw materials on account)
12/2
Work in Process Inventory
5,061
Raw Materials Inventory
5,061
(To assign materials to jobs J57 & K52)
12/2
Work in Process Inventory
40,000
Manufacturing Overhead
3,000
Raw Materials Inventory
43,000
(To assign materials to jobs and overhead)
12/3
Work in Process Inventory
99
Factory Labor
99
(To assign labor to jobs J57 & K52)
12/3
Work in Process Inventory
1,791
Manufacturing Overhead
1,791
(To assign overhead to jobs J57 & K52)
12/8
Work in Process Inventory
1,059
Raw Materials Inventory
1,059
(To assign materials to jobs J57 & K52)
12/9
Work In Process Inventory
99
Factory Labor
99
(To assign labor to jobs J57 & K52)
12/9
Work in Process Inventory
1,990
Manufacturing Overhead
1,990
(To assign overhead to jobs J57 & K52)
12/12
Factory Labor
65,000
Cash
65,000
(To record factory labor costs and payment)
12/13
Manufacturing Overhead
9,000
Cash
9,000
(To record payment of factory water bill)
12/14
Work in Process Inventory
3,459
Raw Materials Inventory
3,459
(To assign materials to jobs J57 & K52)
12/15
Work In Process
99
Factory Labor
99
(To assign labor to jobs J57 & K52
12/15
Work in Process Inventory
1,990
Manufacturing Overhead
1,990
(To assign overhead to jobs J57 & K52)
12/15
Finished Goods Inventory
15,647
Work in Process Inventory
15,647
(To record completion of jobs J57 & K52)
12/18
Finished Goods Inventory
50,000
Work in Process Inventory
50,000
(To record completion of jobs)
12/21
Manufacturing Overhead
12,000
Cash
12,000
(To record payment of factory electric bill)
12/31
Manufacturing Overhead
36,800
Property Taxes Payable
12,000
Prepaid Insurance
8,800
Accumulated Depreciation
16,000
(To record overhead costs)
(c) 12/31
Cost of Goods Sold
3,600
Manufacturing Overhead*
3,600
(To transfer underapplied overhead to cost of goods sold)
(d) Since production involved the use of machinery that required minimal labor, using machine hours as the cost driver for producing the sprinkler heads would more accurately reflect the overhead costs than would direct labor.
When the irrigation system is installed, this would require a great deal of labor and minimal machinery. Therefore, the cost driver for overhead costs would more likely be direct labor costs.
JOB COST SHEET
Job Number J57
Quantity 237 units
Date Requested Dec 2
Date Completed Dec 15, 2012
Item special order parts
Direct
Direct
Manufacturing
Overhead
Date
Materials
Labor
Hours
Rate
Amount
2-Dec
$ 3,374
3-Dec
$ 66
2 1/2
$ 398*
$ 995
8-Dec
706
9-Dec
66
3
398
1,194
14-Dec
2,306
15-Dec
66
3
398
1,194
Cost Summary
Direct materials
$ 6,386
Direct labor
198
Manufacturing overhead
3,383
Total Cost
$ 9,967
Unit Cost ($9,967/237 units)
$ 42.05
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