Jones Custom Furniture Manufacturing, Inc., made the following estimates at the beginning of the year, 2012: Budgeted

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Jones Custom Furniture Manufacturing, Inc., made the following estimates at the beginning of the year, 2012:

Budgeted direct labor costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000

Budgeted direct labor hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Budgeted manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $520,000

Jones applies manufacturing overhead to specific job orders on the basis of direct labor hours. During the month of January, the following transactions occurred for Job #345, an order for 10 custom oak chairs, manufactured in the first week of January 2012:

Jan. 3 Requisitioned direct materials (lumber, fabric, paint), $876; put into production on Job #345.

3 Requisitioned indirect materials (glue, staples, sandpaper, and equipment grease), $154, for use in manufacturing the 10 chairs for Job #345, as well as other subsequent jobs.

Jan. 7 Processed time card for Employee 214; 25 direct labor hours attributed to Job #345 at wage rate of $15 per hour.

7 Applied manufacturing overhead at the predetermined rate to Job #345, based on the actual direct labor hours.

7 Processed the manufacturing supervisor’s weekly salary of $1,000. (This salary is considered indirect labor because the supervisor oversees all jobs in process and does not account for her time on a job-by-job basis.)

7 Job #345 was completed and transferred to the finished goods warehouse to await shipment to the customer.

9 The 10 oak chairs (Job #345) were shipped to the customer. The sales invoice reflects a sales price of $3,000 on account.

In addition to Job #345, Jones completed 47 other job orders in January and had seven others in process at month-end. The following information summarizes additional manufacturing transactions for Jones for the month of January (not relating to Job #345):

a. Raw materials purchased on account, $102,675.

b. Requisitioned raw materials to specific job orders: $90,430 (80% direct materials and the remainder indirect materials not directly attributable to any one specific job).

c. Incurred and paid direct labor wages totaled, $24,600; an average of $15 per hour for 1,640 total direct labor hours for January.

d. Applied manufacturing overhead at the predetermined rate to all jobs in progress on the basis of the actual direct labor hours incurred by job.

e. Incurred and paid supervisor salaries and other indirect manufacturing labor (e.g., maintenance labor) totaling $7,000.

f. Incurred and paid the following costs associated with the manufacturing process and facility:

Factory rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,600

Factory utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700

Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200

Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,900

$ 13,400

g. Recorded depreciation of manufacturing equipment for the month, $5,500.

h. The cost of the 47 jobs completed during the month totaled $125,446.

i. Shipped all completed jobs to customers by month-end at a total sales price of $200,714 on account.

j. Incurred and paid selling and administrative costs (e.g., administrative salaries, sales commissions, office supplies, office rent, etc.), $46,514.

Required:

1. a. Calculate Jones’ predetermined overhead rate for the year 2012.

b. Prepare journal entries for the first seven transactions (relating to Job $#345). Omit explanations.

c. Determine the total cost of manufacturing each of the 10 oak chairs.

d. Determine the total gross margin earned on all 10 oak chairs.

2. Prepare the journal entries for transactions (a)-(j). Omit explanations.

3. Close Manufacturing Overhead to Cost of Goods Sold (include all transactions noted for Job #345).

4. Calculate Jones’ total gross margin for January, including Job #345.

5. Calculate Jones’ total operating income for January.

6. Determine the ending January balances in Raw Materials Inventory, Work-in-Process Inventory, and Finished Goods Inventory (assume no beginning balances).


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Related Book For  answer-question

Accounting concepts and applications

ISBN: 978-0538745482

11th Edition

Authors: Albrecht Stice, Stice Swain

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