Widmer watercraft\'s predetermined overhead rate for the year 2017 Is 200% of di

Question

Widmer watercraft's predetermined overhead rate for the year 2017 Is 200% of direct labor. Information on the company's production activities during May 2017 follows. a. Purchased raw materlals on credit, $220,000 b. Materlals requisitions record use of the following materlals for the month. Job 136 Job 137 Job 138 Job 139 Job 140 Total direct materials Indirect materials Total materials used $ 48,5e 34,8e0 20,8ee 22,8ee 7,eee 132,3ee 2e,5ee $152,8e8 c. Pald $15,750 cash to a computer consultant to reprogram factory equipment. d. Time tickets record use of the following labor for the month. These wages were pald In cash. Job 136 Job 137 Job 138 Job 139 Job 140 Total direct labor Indirect labor Total $ 12,2e 1e,8e0 37,7ee 39,2ee 3,800 103,7ee 24,50 $128,2e8 e. Applled overhead to Jobs 136, 138, and 139 f. Transferred Jobs 136, 138, and 139 to Finished Goods g. Sold Jobs 136 and 138 on credit at a total price of $545,000 h. The company Incurred the folowing overhead costs during the month (credit Prepald Insurance for expired factory Insurance). Depreciation of factory building Depreciation of factory equipment Expired factory insurance Accrued property taxes payable $69,5ee 36,5ee 36,88e l. Applied overhead at month-end to the Work In Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

Explanation / Answer

Solution:

Part 2 --- Journal Entries

Transaction

General Journal

Debit

Credit

a

Raw Materials Inventory

$220,000

Accounts Payable

$220,000

b

Work In Process Inventory (Direct materials)

$132,300

Factory Overhead (Indirect materials)

$20,500

Raw Materials Inventory

$152,800

c

Factory Overhead

$15,750

Cash

$15,750

d

Work In Process Inventory (Direct Labor)

$103,700

Factory Overhead (Indirect Labor)

$24,500

Wages Payable

$128,200

e

Work In Process Inventory (Refer Note 1)

$178,200

Factory Overhead

$178,200

(For Job 136 $24,400 + Job 138 $75,400 + Job 139 $78,400)

f

Finished Goods Inventory (Refer Note 1)

$358,600

Work In Process Inventory

$358,600

g(1)

Accounts Receivable

$545,000

Sales Revenue

$545,000

g(2)

Cost of Goods Sold

(Cost of Job 136 $85,100 + Job 138 $133,100)

$218,200

Finished Goods Inventory

$218,200

h

Factory Overhead

$153,000

Depreciation of factory building

$69,500

Depreciation of factory equipment

$36,500

Prepaid Insurance

$11,000

Accrued Property tax payable

$36,000

i.

Work In Process Inventory

$29,200

Factory Overhead

$29,200

(Job 137 $21,600 + Job 140 $7,600)

Note 1 ---

Job 136

Job 137

Job 138

Job 139

Job 140

Total

Direct materials

$48,500

$34,000

$20,000

$22,800

$7,000

$132,300

Direct Labor

$12,200

$10,800

$37,700

$39,200

$3,800

$103,700

Applied Factory Overhead

(200% of direct labor cost)

$24,400

$21,600

$75,400

$78,400

$7,600

$207,400

Total Manufacturing Cost

$85,100

$66,400

$133,100

$140,400

$18,400

$443,400

Status

Completed & TRFD to Finished Goods

Not Completed

Completed & TRFD to Finished Goods

Completed & TRFD to Finished Goods

Not Completed

Cost of Completed and Transferred Jobs to Finished Goods

$85,100

$133,100

$140,400

$358,600

STATUS

SOLD

SOLD

Part 3 --- T Accounts

Raw Materials Inventory

Beg bal

$0

$132,300

Work in Process

Accounts Payable

$220,000

$20,500

Factory Overhead

Ending bal

$67,200

Work In Process Inventory

Beg bal

$0

Direct materials

$132,300

$358,600

Finished Goods

Direct labor

$103,700

Factory Overhead Applied

$178,200

Factory Overhead applied for Job 137 & 140)

$29,200

Ending Bal.

$84,800

Factory Overhead

Indirect materials

$20,500

$178,200

Work In Process (Factory Overhead Applied for Job 136, 138 & 139)

indirect labor

$24,500

$29,200

Work In Process (Factory Overhead Applied for Job 137 & 140)

Cash

$15,750

Depreciation of factory building

$69,500

Depreciation of factory equipment

$36,500

Prepaid Insurance

$11,000

Accrued Property tax payable

$36,000

Ending balance

$6,350

Finished Goods Inventory

Beg bal

$0

$218,200

Cost of Goods Sold

Work In Process

$358,600

Ending Bal.

$140,400

Cost of Goods Sold

Finished Goods Inventory

$218,200

Ending Bal.

$218,200

Part 4 – Report

Report of Job Costs

Work in Process Inventory

Job 137

$66,400

Job 140

$18,400

Balance

$84,800

Finished Goods Inventory

Job 139

$140,400

Balance

$140,400

Cost of Goods Sold

Job 136

$85,100

Job 138

$133,100

Balance

$218,200

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Transaction

General Journal

Debit

Credit

a

Raw Materials Inventory

$220,000

Accounts Payable

$220,000

b

Work In Process Inventory (Direct materials)

$132,300

Factory Overhead (Indirect materials)

$20,500

Raw Materials Inventory

$152,800

c

Factory Overhead

$15,750

Cash

$15,750

d

Work In Process Inventory (Direct Labor)

$103,700

Factory Overhead (Indirect Labor)

$24,500

Wages Payable

$128,200

e

Work In Process Inventory (Refer Note 1)

$178,200

Factory Overhead

$178,200

(For Job 136 $24,400 + Job 138 $75,400 + Job 139 $78,400)

f

Finished Goods Inventory (Refer Note 1)

$358,600

Work In Process Inventory

$358,600

g(1)

Accounts Receivable

$545,000

Sales Revenue

$545,000

g(2)

Cost of Goods Sold

(Cost of Job 136 $85,100 + Job 138 $133,100)

$218,200

Finished Goods Inventory

$218,200

h

Factory Overhead

$153,000

Depreciation of factory building

$69,500

Depreciation of factory equipment

$36,500

Prepaid Insurance

$11,000

Accrued Property tax payable

$36,000

i.

Work In Process Inventory

$29,200

Factory Overhead

$29,200

(Job 137 $21,600 + Job 140 $7,600)

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