BE 3-5 Cost Flows in an ABC System [LO5]

Larker Corporation implemented activity-based costing several years ago and uses it for its external financial reports. The company has four activity cost pools, which are listed below.

Activity Cost Pool	Activity Rate
Machine related	$	24	per MH
Purchase orders	$	89	per order
Machine setups	$	175	per setup
General factory	$	17	per DLH

At the beginning of the year, the company had inventory balances as follows:

Raw materials	$	34,000
Work in process	$	31,405
Finished goods	$	57,900

Selected transactions recorded by the company during the year are given below:

a.	Raw materials were purchased on account, $857,000.
b.	Raw materials were requisitioned for use in production, $851,000 ($697,820 direct and $153,180 indirect).
c.	Labor costs were incurred in the factory, $384,000 ($307,200 direct labor and $76,800 indirect labor).
d.	Depreciation was recorded on factory assets, $215,000.
e.	Miscellaneous manufacturing overhead costs were incurred, $190,000.
f.	Manufacturing overhead cost was applied to production. Actual activity during the year was as follows:

Activity Cost Pool	Actual Activity
Machine related	4,600	MHs
Purchase orders	800	orders
Machine setups	500	setups
General factory	27,000	DLHs

g.	Completed products were transferred to the company's finished goods warehouse. According to the company's costing system, these products cost $1,588,072.

Requirement 1:

Prepare journal entries to record transactions (a) through (g) above. (Omit the "$" sign in your response.)

	General Journal	Debit	Credit
a.	(Click to select)Wages payableWork in processRaw materialsAccounts payableManufacturing overhead
	(Click to select)Raw materialsWages payableAccounts payableWork in processManufacturing overhead
b.	(Click to select)Raw materialsAccounts payableManufacturing overheadWork in processWages payable
	(Click to select)Work in processAccounts payableRaw materialsManufacturing overheadWages payable
	(Click to select)Wages payableAccounts payableWork in processRaw materialsManufacturing overhead
c.	(Click to select)Accounts payableWages payableRaw materialsManufacturing overheadWork in process
	(Click to select)Accounts payableWork in processRaw materialsWages payableManufacturing overhead
	(Click to select)Raw materialsWages payableAccounts payableWork in processManufacturing overhead
d.	(Click to select)Accounts payableAccumulated depreciationWork in processFinished goodsManufacturing overhead
	(Click to select)Accounts payableFinished goodsManufacturing overheadAccumulated depreciationWork in process
e.	(Click to select)Accumulated depreciationFinished goodsManufacturing overheadWork in processAccounts payable
	(Click to select)Accounts payableManufacturing overheadWork in processAccumulated depreciationFinished goods
f.	(Click to select)Work in processAccounts payableManufacturing overheadAccumulated depreciationFinished goods
	(Click to select)Manufacturing overheadFinished goodsAccumulated depreciationAccounts payableWork in process
g.	(Click to select)Finished goodsAccumulated depreciationManufacturing overheadAccounts payableWork in process
	(Click to select)Manufacturing overheadFinished goodsWork in processAccounts payableAccumulated depreciation

Requirement 2:

Post the entries in part (1) above to T-accounts.(Record the transactions in the given order. Omit the "$" sign in your response.)

Raw Materials

Beg. Bal.			(Click to select)(g)(d)(a)(e)(b)(f)(c)
(Click to select)(e)(f)(c)(b)(d)(a)(g)
End. Bal.

Work in Process

Beg. Bal.			(Click to select)(e)(g)(a)(b)(f)(d)(c)
(Click to select)(d)(b)(c)(f)(e)(a)(g)
(Click to select)(g)(a)(c)(d)(b)(f)(e)
(Click to select)(b)(a)(d)(e)(g)(c)(f)
End. Bal.

Finished Goods

Beg. Bal.
(Click to select)(d)(e)(b)(f)(c)(a)(g)
End. Bal.

Accumulated Depreciation

			(Click to select)(c)(g)(e)(d)(f)(a)(b)

Accounts Payable

			(Click to select)(b)(c)(e)(d)(g)(f)(a)
			(Click to select)(e)(d)(g)(f)(b)(a)(c)
			End. Bal.

Wages Payable

			(Click to select)(e)(g)(f)(b)(c)(a)(d)

Manufacturing Overhead

(Click to select)(a)(g)(e)(b)(d)(f)(c)			(Click to select)(e)(d)(b)(c)(a)(g)(f)
(Click to select)(e)(b)(a)(g)(c)(f)(d)
(Click to select)(e)(d)(g)(c)(b)(a)(f)
(Click to select)(f)(b)(g)(c)(e)(d)(a)
			End. Bal.

Requirement 3:

Compute the underapplied or overapplied overhead cost in the Manufacturing Overhead account. (Input all amounts as positive values. Omit the "$" sign in your response.)

(Click to select)UnderappliedOverapplied overhead

$