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.

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Related Book For  answer-question

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

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