Duchess Ltd. manufactures and installs kitchen cabinetry. It uses normal job costing with two direct cost categories
Question:
Duchess Ltd. manufactures and installs kitchen cabinetry. It uses normal job costing with two direct cost categories (direct materials and direct manufacturing labour) and one indirect cost pool for manufacturing overhead (MOH), applied on the basis of machine-hours (MH). At the beginning of the year, the company estimated that it would work 980,000 MH and had budgeted $73,500,000 for MOH. The following data (in $ millions) pertain to operations for the year 2016:
Materials control (beginning balance), December 31, 2015 $...........................6.0
Work-in-process control (beginning balance), December 31, 2015..............1.8
Finished goods control (beginning balance), December 31, 2015................7.2
Materials and supplies purchased on account.......................................238
Direct materials used..................................................................194
Indirect materials (supplies) issued to various production departments.........27
Direct manufacturing labour..........................................................123
Indirect manufacturing labour incurred by various departments..................19
Depreciation on plant and manufacturing equipment..............................21
Miscellaneous manufacturing overhead incurred (credit Various Liabilities;
Ordinarily would be detailed as repairs, utilities, etc.)...............................9
Manufacturing overhead allocated (972,000 actual MH)............................?
Cost of goods manufactured.......................................................374.3
Revenues................................................................................512
Cost of goods sold...................................................................368.4
Required
1. Prepare general journal entries. Post to T-accounts. What is the ending balance of Work-in-Process Control?
2. Show the journal entry for disposing of over allocated or under allocated manufacturing overhead directly as a year-end write-off to Cost of Goods Sold. Post the entry to T-accounts.
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham