Question

The May 1^st balances for the following accounts are:

Raw Materials Inventory               $   6,500

Work in Process Inventory          $   5,400 (Job 1006 - $3,100; Job 1007 - $2,300)

Finished Goods Inventory             $          0

The transactions for May are as follows:

a.   Purchased materials on account, $25,000.

b.   Issued materials to production as follows:

Job 1006 - $2,700

Job 1007 - $5,500

Job 1008 - $2,300

Job 1009 - $3,800

Job 1010 - $3,000

Job 1011 - $3,700

c.Issued indirect materials to production, $5,750.

d.The company processed payroll and incurred the following costs:

a.The direct labor rate is $14.50 per hour.

Direct labor hours (DLH) incurred are as follows:

(Job 1006 – 140 DLH; Job 1007 – 56 DLH; Job 1008 – 305 DLH; Job 1009 – 75 DLH;

Job 1010 – 125 DLH; Job 1011 – 310 DLH);

b.Indirect factory labor, $30,800;

c.Selling department salary, $10,500;

d.Selling department commissions, $5, 900;

e.Administrative personnel salary, $12,400.

e.Incurred various actual costs on account:

Depreciation on factory equipment, $10,100;

Depreciation on equipment used by administrative personnel, $1,400;

Factory utilities, $1,050;

Corporate headquarters utilities, $450;

Property Taxes on factory equipment, $5,950;

Property taxes on corporate headquarters, $2,090;

Maintenance, 1,150 for corporate headquarters and $7,450 for plant.

f.The company uses normal costing. It allocates manufacturing overhead costs using budgeted rate per direct labor hour. Budgeted manufacturing overhead costs for the period were $590,000 and budgeted direct labor-hours were 10,000 DLHs. Calculate the predetermined overhead rate and journalize the applied manufacturing overhead cost for the period (Show your calculations).

g.Completed Jobs #1006, 1007, and 1011. (Hint: you will need to determine the cost of each job – see schedule of job cost.)

h.Sold Jobs #1006 and #1007. Customers were billed $25,000 for Job #1006 and $44,400 for Job #1007.

Requirements:

1. Compute the margin and margin ratios for Jobs 1006 and 1007.

Answer 1