Based on the compatibility and efficiency of its newly designed sprinkler systems, Waterways was successful in its bid to upgrade
Based on the compatibility and efficiency of its newly designed sprinkler systems, Waterways was successful in its bid to upgrade the irrigation systems for 10 soccer fields owned by the local municipality. Three of the local installation operators were assigned to work on the upgrades as these employees all were familiar with the new systems. At the end of the first month of work the following information was pulled from the work in process inventory records for the jobs that had been started by the three groups.
During the month of June the following transactions related to the three active upgrades took place:
June 1 Requisitioned site supplies from raw materials inventory-Job SOC-01, $1,325; Job SOC-02, $860.
June 1 Annual construction liability insurance premium paid for three site crews, $18,000.
June 2 Monthly rental of small equipment for all three sites, $910.
June 3 Requisitioned site supplies from raw materials inventory- Job SOC-03, $891.
June 5 Requisitioned direct materials from raw materials inventory-Job SOC-01, $2,100; Job SOC-02, $6,000; Job SOC-03, $500.
June 10 Transferred completed raw materials from the factory, $28,000.
June 15 Paid direct labour costs: Job SOC-01, $5,000; Job SOC-02, $8,000; Job SOC-03, $1,500, and employee benefits totalling $2,900.
June 16 Job SOC-01 completed.
June 21 Requisitioned direct materials from raw materials inventory-Job SOC-03, $3,000.
June 21 Requisitioned site supplies from raw materials inventory- Job SOC-03, $756.
June 23 Job SOC-03 completed.
June 30 Monthly depreciation on large equipment for three sites, $6,000.
June 30 Paid direct labour costs: Job SOC-02, $3,200; Job SOC-03, $7,200; and employee benefits of $2,080.
June 30 Paid salary for site supervisors, delivery driver, and site cleaners, $8,000.
June 30 Paid rent for on-site portable toilets and garbage containers for the month, $2,100.
(a) Using just the information provided from the work in process balances for May 31, calculate the predetermined overhead rate that Waterways has been using for its installations.
(b) Waterways writes off any balance in the manufacturing overhead account to Cost of Goods Sold at the end of every month. Assuming that all the transactions listed above relate to the three upgrades, calculate the balance in the manufacturing overhead account at the end of June, and indicate if it is over- or under-applied.
(c) Prepare summary journal entries to record all the transactions for the month of June. Dates and explanations are not required.
(d) Determine the balance in the Work in Process account at the end of the month, and reconcile this balance to the jobs not completed at the end of the month.
(e) Waterways received a contract price of $75,000 for each upgrade completed. Determine the gross profit on the completed jobs during the month of June.
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