Question: Hello, would you be able to help me with this question? Oil field Equipment company is a small company that manufactures specialty heavy equipment for

Hello, would you be able to help me with this question?

Oil field Equipment company is a small company that manufactures specialty heavy equipment for use in Alberta oil-fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the direct labour-hours. At the beginning of the current year, the following estimates were made to compute the predetermined overhead rate: manufacturing overhead cost, 360,000, and 900 direct labour-hours. The following transactions took place during the year (all purchases purchases and services were acquired on account):

a. Raw materials were purchased for use in production: $200,000

b. Raw materials were requisitioned for use in production (all direct materials): $185,000

c. Utility bills were incurred in the factory: $70,000 (90% related to factory operations and the remaining to administrative activities).

d. Costs for salaries and wages were incurred as follows:

  • Direct labour (975 hours).................................$230,000
  • Indirect labour..................................................$90,000
  • selling and administrative salaries.................. $110,000

e. Maintenance costs were incurred in the factory: $54,000

f. Advertising costs were incurred: $136,000

g. Depreciation was recorded for the year: $95,000 (80% relates to factory operations and the remainder relates to selling and admin equipment)

I. Manufacturing overhead cost was applied to jobs: $_______?

j. cost of goods manufactured for the year was $770,000

k. sales for the year (all on account) totalled $1,200,000. These goods cost $800,000 according to their job cost sheets.

The balance in the inventory accounts at the beginning of the year were as follows:

  • Raw materials.....................$30,000
  • Work in process..................$21,000
  • Finished goods...................$60,000

Required:

  1. Prepare journal entries to record above data.
  2. Post your entries to T-accounts (Don't forget to enter opening inventory balance above.) Determine the ending balances in the inventory accounts and in the manufacturing overhead account.
  3. Create a schedule of cost of goods manufactured
  4. Create a journal entry to properly dispose of any balance in the Manufacturing overhead account. Create a schedule of costs of goods sold.

Thanks!

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!