Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each batch ofsouvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensiveproduction process, so it assigns manufacturing overhead based on direct labour cost. Exclusive'spredetermined overhead rate for 2020 was computed from the following data:Total estimated factory overhead$2,400,000Total estimated direct labour cost$2,000,000The WIP account given below relates to the activities of Exclusive Souvenirs for the month of June:WIP Inventory A/CJune 1 Balance b/f$15,000Direct Materials Used123,000Additional data:Total material requisitionedManufacturing Labour Costs incurred$153,000$163,500 (75% represents direct labour)Other manufacturing overheads incurred$94,275...........Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold tothe hotel on account at a margin of 33 1/3% on sales.Required:а)Compute Exclusive Souvenirs predetermined manufacturing overhead rate for 2020.b)State the journal entries necessary to record the following transactions in the general journal.(i) Total materials issued to production(ii) Manufacturing labour incurred(iii)Assign manufacturing labour to the appropriate accounts(iv)Other manufacturing overhead incurred(v) Manufacturing overhead applied to production(vi)Move completed jobs to finished goods(vii) Account for jobs completed and sold(viii)Post the manufacturing overhead transactions to the Manufacturing Overhead T-account.What is the balance on the account before performing end of period closing entries? Ismanufacturing overhead under- or over- absorbed? State the journal entries necessary todispose of the variance. Assume that the manufacturing overhead variance is immaterial.

Overhead rate is mentioned in the given question: Total estimated factory overhead - $2,400,000…

Required: a) Compute Exclusive Souvenirs predetermined manufacturing overhead rate for 2020. b) State the journal entries necessary to record the following transactions in the general journal. (i) Total materials issued to production (ii) Manufacturing labour incurred (iii)Assign manufacturing labour to the appropriate accounts

Required: a) Compute Exclusive Souvenirs predetermined manufacturing overhead rate for 2020. b) State the journal entries necessary to record the following transactions in the general journal. (i) Total materials issued to production (ii) Manufacturing labour incurred (iii)Assign manufacturing labour to the appropriate accounts

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 17E: Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the...

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Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)
Compute the total job cost for each of the following scenarios: a. If the direct labor cost method is used in applying factory overhead and the predetermined rate is 100%, what amount should be charged to Job 2010 for factory overhead? Assume that direct materials used totaled 5,000 and that the direct labor cost totaled 3,200. b. If the direct labor hour method is used in applying factory overhead and the predetermined rate is 10 an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct materials used totaled 5,000, the direct labor cost totaled 3,200, and the number of direct labor hours totaled 250. c. If the machine hour method is used in applying factory overhead and the predetermined rate is 12.50 an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct materials used totaled 5,000, the direct labor cost totaled 3,200, the direct labor hours were 250 hours, and the machine hours were 295 hours.
Kenkel, Ltd. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 80,000. b. Requisitioned raw materials to production, 80,000. c. Distributed direct labor costs, 10,000. d. Factory overhead costs incurred, 60,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 225,000, on account.
The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be 3,150,000, and total direct labor costs would be 1,800,000. During February, the actual direct labor cost totalled 160,000, and factory overhead cost incurred totaled 283,900. a. What is the predetermined factory overhead rate based on direct labor cost? b. Journalize the entry to apply factory overhead to production for February. c. What is the February 28 balance of the account Factory OverheadBlending Department? d. Does the balance in part (c) represent over- or underapplied factory overhead?
Ventana Window and Wall Treatments Company provides draperies, shades, and various window treatments. Ventana works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Ventanas income statement for last year is as follows: Ventana wants to find a markup on cost of goods sold that will allow them to earn about the same amount of profit on each job as was earned last year. Required: 1. What is the markup on cost of goods sold (COGS) that will maintain the same profit as last year? (Round the percentage to two significant digits.) 2. A customer orders draperies and shades for a remodeling job. The job will have the following costs: What is the price that Ventana will quote given the markup percentage calculated in Requirement 1? (Round the price to the nearest dollar.) 3. What if Ventana wants to calculate a markup on direct materials cost, since it is the largest cost of doing business? What is the markup on direct materials cost that will maintain the same profit as last year? (Round the percentage to two significant digits.) What is the bid price Ventana will use for the job given in Requirement 2 if the markup percentage is calculated on the basis of direct materials cost? (Round to the nearest dollar.)
Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense. What is the predetermined overhead rate if machine hours are considered the cost driver? What is the cost of Job 416? What is the overhead incurred during the month?
Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor hours costing $2,500,000 in labor and utilizing 12,500 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hours
Green Bay Cheese Company estimates its overhead to be $375,000. It expects to have 125,000 direct labor hours costing $1,500,000 in labor and utilizing 15,000 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hours
Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?
Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each batch of souvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensive production process, so it assigns manufacturing overhead based on direct labour cost. Exclusive’s predetermined overhead rate for 2020 was computed from the following data:Total estimated factory overhead$2,400,000Total estimated direct labour cost$2,000,000The WIP account given below relates to the activities of Exclusive Souvenirs for the month of June:WIP Inventory A/CJune 1 Balance b/fDirect Materials Used$15,000123,000Additional data:▪ Total material requisitioned …………………………………▪ Manufacturing Labour Costs incurred ………………….▪ Other manufacturing overheads incurred …………...$153,000$163,500 (75% represents direct labour)$94,275▪ Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold to the hotel on account at a margin of 33 1/3% on sales. d) What is…
Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each batch of souvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensive production process, so it assigns manufacturing overhead based on direct labour cost. Exclusive’s predetermined overhead rate for 2020 was computed from the following data:Total estimated factory overhead$2,400,000Total estimated direct labour cost$2,000,000The WIP account given below relates to the activities of Exclusive Souvenirs for the month of June:WIP Inventory A/CJune 1 Balance b/fDirect Materials Used$15,000123,000Additional data:▪ Total material requisitioned …………………………………▪ Manufacturing Labour Costs incurred ………………….▪ Other manufacturing overheads incurred …………...$153,000$163,500 (75% represents direct labour)$94,275▪ Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold to the hotel on account at a margin of 33 1/3% on sales.Required:a)…
Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each batch ofsouvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensiveproduction process, so it assigns manufacturing overhead based on direct labour cost. Exclusive’spredetermined overhead rate for 2020 was computed from the following data:Total estimated factory overhead $2,400,000Total estimated direct labour cost $2,000,000The WIP account given below relates to the activities of Exclusive Souvenirs for the month of June: WIP Inventory A/C June 1 Balance b/f $15,000 Direct Materials Used $123,000Additional data:▪ Total material requisitioned …………………………………$153,000▪ Manufacturing Labour Costs incurred …………………. $163,500 (75% represents direct labour)▪ Other manufacturing overheads incurred …………... $94,275▪ Two jobs were completed…