At the beginning of the current year, GK Corporation estimated that its manufacturing overhead would be Php70,000

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Question:

At the beginning of the current year, GK Corporation estimated that its manufacturing overhead would be Php70,000 and the activity level would be 10,000 machine-hours. The level of activity at capacity is 14,000 machine-hours. The actual manufacturing overhead for the year was Php63,300 and the actual level of activity was 10,100 machine-hours.

1.If the company bases its predetermined overhead rate on estimated machine-hours, then its predetermined overhead rate would have been: (6 points)

2. If the company bases its predetermined overhead rate on estimated machine-hours, then its overhead for the year would have been: (6 points)

3. If the company bases its predetermined overhead rate on machine-hours at capacity, then its predetermined overhead rate would have been: (6 points)

4. If the company bases its predetermined overhead rate on machine-hours at capacity, then the cost of unused capacity reported on the income statement would have been: (6 points)

Ali Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's inventory balances were as follows:

Raw materials ................................ Php36,000

Work in process ............................. Php41,000

Finished goods ............................... Php104,000

The company applies overhead to jobs using a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated that it would work 21,000 machine hours and incur Php210,000 in manufacturing overhead cost. The following transactions were recorded for the year:

a. Raw materials were purchased, Php346,000.

b. Raw materials were requisitioned for use in production, Php338,000 (Php302,000 direct and Php36,000 indirect).

c. The following employee costs were incurred: direct labor, Php360,000; indirect labor, Php68,000; and administrative salaries, Php111,000.

d. Selling costs, Php153,000.

e. Factory utility costs, Php29,000.

f. Depreciation for the year was Php102,000 of which Php93,000 is related to factory operations and Php9,000 is related to selling and administrative activities.

g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 19,000 machine-hours.

h. The cost of goods manufactured for the year was Php870,000.

i. Sales for the year totaled Php1,221,000 and the costs on the job cost sheets of the goods that were sold totaled Php855,000.

j. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.

Required:

Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.