# Question: Starr Mfg s predetermined overhead rate is 200 of direct labor

Starr Mfg.'s predetermined overhead rate is 200% of direct labor. Information on the company's production activities during September 2015 follows.
a. Purchased raw materials on credit, \$125,000.
b. Materials requisitions record use of the following materials for the month.
Job 487. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$30,000
Job 488. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Job 489. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Job 490. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000
Job 491. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Total direct materials. . . . . . . . . . . . . . . . . . . . 80,000
Indirect materials. . . . . . . . . . . . . . . . . . . . . . . 12,000
Total materials used. . . . . . . . . . . . . . . . . . . . .\$92,000
c. Paid \$11,000 cash for miscellaneous factory overhead costs.
d. Time tickets record use of the following labor for the month. These wages are paid in cash.
Job 487. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$ 8,000
Job 488. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000
Job 489. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Job 490. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,000
Job 491. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Total direct labor. . . . . . . . . . . . . . . . . . . . . . . 68,000
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\$84,000
e. Allocated overhead to Jobs 487, 489, and 490.
f. Transferred Jobs 487, 489, and 490 to Finished Goods.
g. Sold Jobs 487 and 489 on credit for a total price of \$340,000.
h. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).
Depreciation of factory building . . . . . . . . . . \$37,000
Depreciation of factory equipment . . . . . . . . 21,000
Expired factory insurance . . . . . . . . . . . . . . . . 7,000
Accrued property taxes payable . . . . . . . . . . . 31,000
i. Applied overhead at month-end to the Work in Process Inventory account (Jobs 488 and 491) using the predetermined overhead rate of 200% of direct labor cost.
Required
1. Prepare a job cost sheet for each job worked on in the month. Use the following simplified form.
Job No. __________
Materials . . . . . . . . . \$___________
Labor. . . . . . . . . . . . ____________
Overhead . . . . . . . . ____________
Total cost . . . . . . . . \$___________
2. Prepare journal entries to record the events and transactions a through i.
3. Set up T-accounts for each of the following general ledger accounts, each of which started the month with a zero balance: Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Factory Overhead, Cost of Goods Sold. Then post the journal entries to these T-accounts and deter-mine the balance of each account.
4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Work in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.

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