The following data from the just completed year are taken from the accounting records of Kenton
Question:
The following data from the just completed year are taken from the accounting records of Kenton
Company:
Sales$ 975,000
Direct labor cost $ 165,000
Raw material purchases$ 229,000
Selling expense$ 48,750
Administrative expenses$ 146,250
Manufacturing overhead applied to work in process $ 180,000
Actual manufacturing overhead costs $ 175,050
Inventories: Beginning Ending
Raw materials $ 18,000 $ 17,500
Work in process $ 20,000 $ 14,750
Finished goods $ 9,000 $ 11,000
Required:
1. Prepare schedule of cost of goods manufactured. Assume all raw materials used in production
were direct materials.
2. Prepare schedule of cost of goods sold. Assume that the company's underapplied or
overapplied overhead is closed to Cost of Goods Sold.
3. Prepare income statement.
Job Order Costing (5% Grade)
The Searider Company uses a job-order costing system. The following transactions occurred in
April:
a. Raw materials were purchased on account, $180,000.
b. Raw materials used in production, $148,000 ($130,000 direct materials and $18,000 indirect
materials).
c. Accrued direct labor cost of $75,000 and indirect labor cost of $105,000.
d. Depreciation recorded on factory equipment, $40,000.
e. Other manufacturing overhead costs accrued during April, $118,000.
f. The company applies manufacturing overhead cost to production using a predetermined
overhead rate of $6 per machine-hours. A total of 46,000 machine-hours were used in April.
g. Jobs costing $495,000 according to their job cost sheets were completed during April and
transferred to Finished Goods.
h. Jobs that had cost $450,000 to complete according to their job cost sheets were shipped to
customers during the month. These jobs were sold on account at 30% above cost.
Required:
1. Prepare journal entries to record the transactions given above.
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant
transactions from above to each account. Compute the ending balance in each account,
assuming that Work in Process has a beginning balance of $39,000.
Managerial Accounting
ISBN: 978-0078111006
14th edition
Authors: Ray Garrison, Eric Noreen and Peter Brewer