CASE STUDY 2 - MANUFACTURING Roshan Factory uses a job-order costing system. The factory applies factory...

Transcribed Image Text:

CASE STUDY 2 - MANUFACTURING Roshan Factory uses a job-order costing system. The factory applies factory overhead (FOH) to work-in-process inventory using a budgeted overhead rate. The factory does not use Overhead Applied and Under/Over-applied Overhead accounts; applied overhead is credited to the Factory Overhead accounts before the actual overhead are incurred, and it is debited to Work in Process Inventory account. Any difference in the balances in the Factory overhead account will be closed off to Cost of Sales account directly. The factory incurred the following transactions during a period: A. Raw materials purchased on accounts for S65,000. 8. Raw materials assigned to the job#: $40,000 direct and $20,000 indirect. c. Factory payroll incurred, $100,000: General Labour costs are not included D. Factory labour costs assigned to the job#: $60,000 direct and $40,000 indirect E. Factory overhead assigned to production using a predetermined overhead F. Additional overhead costs were billed, $9,000 G. Jobs completed and transferred to finished goods at cost, $120,000. H. Jobs with a cost of $130,000 were sold on account for $230,000 1. Under/Over-applied overheads were closed off to the Cost of Sales account Note: - The budgeted overhead rate is $3 per machine hour. The factory used 18,000 machine hours during the period. • The inventory balances at the beginning of the period were S70,000 for raw materials, $80,000 for work in process and $90,000 for finished goods. · Assume the opening balances of other extracted T-accounts were zero. Required; Ignore GST and Income Tax. A) Journalise the above transactions B) Post general journal to General ledger accounts (make an adjustment if necessary) c) Prepare a schedule of cost of goods manufactured for the period CASE STUDY 2 - MANUFACTURING Roshan Factory uses a job-order costing system. The factory applies factory overhead (FOH) to work-in-process inventory using a budgeted overhead rate. The factory does not use Overhead Applied and Under/Over-applied Overhead accounts; applied overhead is credited to the Factory Overhead accounts before the actual overhead are incurred, and it is debited to Work in Process Inventory account. Any difference in the balances in the Factory overhead account will be closed off to Cost of Sales account directly. The factory incurred the following transactions during a period: A. Raw materials purchased on accounts for S65,000. 8. Raw materials assigned to the job#: $40,000 direct and $20,000 indirect. c. Factory payroll incurred, $100,000: General Labour costs are not included D. Factory labour costs assigned to the job#: $60,000 direct and $40,000 indirect E. Factory overhead assigned to production using a predetermined overhead F. Additional overhead costs were billed, $9,000 G. Jobs completed and transferred to finished goods at cost, $120,000. H. Jobs with a cost of $130,000 were sold on account for $230,000 1. Under/Over-applied overheads were closed off to the Cost of Sales account Note: - The budgeted overhead rate is $3 per machine hour. The factory used 18,000 machine hours during the period. • The inventory balances at the beginning of the period were S70,000 for raw materials, $80,000 for work in process and $90,000 for finished goods. · Assume the opening balances of other extracted T-accounts were zero. Required; Ignore GST and Income Tax. A) Journalise the above transactions B) Post general journal to General ledger accounts (make an adjustment if necessary) c) Prepare a schedule of cost of goods manufactured for the period

Answer rating: 100% (QA)

JOURNAL ENTRY REF ACCOUNT TITLES DEBIT CREDIT A Raw Materials Inventory 65000 Account... View the full answer