Question

using a job costing system that applies factory overhead on the basis of direct labour hours. Budgeted factory overhead for the year 2020 was $1,235,475, and management budgeted 86 700 direct labour hours. the company had no direct materials, indirect materials, work-in-process, or finished goods inventory at the beginning of February 2020. The following transactions were recorded during February:

1. Purchased 5 000 square meters of oak on account at $25 per square meter.

2. Purchased 50 litres of glue on account at $36 per litre (indirect material).

3. Requisitioned 3 500 square meters of oak and 30.5 litres of glue for production.

4. Incurred and paid payroll costs of $187,900. Of this amount, $46,000 were indirect labour costs; direct labour personnel earned $22 per hour.

5. Paid factory utility bill, $15,230 in cash.

6. February’s insurance cost for the manufacturing property and equipment was $3,500. The premium had been paid in January.

7. Recorded $8,200 depreciation on manufacturing equipment for February.

8. Recorded $2,400 depreciation on an administrative asset for February.

9. Paid advertising expenses in cash, $5,500.

10. Incurred and paid other factory overhead costs, $13,500.

11. Incurred miscellaneous selling and administrative expenses, $13,250.

12. Applied factory overhead to production on the basis of direct labour hours.

13. Completed goods costing $146,000 manufactured during the month.

14. Sales on account in February were $132,000. The cost of goods sold was $112,000.

Required: Keep all calculations to 2 decimal places. In excel format:

v. Prepare a schedule of costs of goods sold for February 2020.

vi. Prepare the income statement for February 2020. Ignore income tax.

Answer 1