Hey Hey Toys Ltd, which uses a job costing system, had two jobs in process at...

 

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Hey Hey Toys Ltd, which uses a job costing system, had two jobs in process at the start of the year: Job number H64 ($84,000) and Job number H65 ($53,500). The following information is available: The company applies manufacturing overhead based on machine hours. Budgeted overhead and machine activity for the year were anticipated to be $845,750 and 17,000 machine hours, respectively. The company worked on four jobs during the first quarter (i.e., from 1 January to 31 March). Direct materials used, direct labour cost incurred, and machine hours consumed were as shown in the following table: Job numbers Direct material Direct labour cost Machine hours H64 $21,000 $35,000 1,200 H65 Nil $22,000 700 H66 $44,500 $65,000 2,000 H67 $15,000 $9,000 500 Manufacturing overhead incurred during the first quarter included accumulated depreciation of $36,000, indirect labour of $60,000, indirect materials used of $50,000 and other factory costs of $139,500. The company completed job number H64 and job number H65 during the first quarter, job number H65 was sold on credit, producing a profit of $34,700 for the firm. Required: Show ALL your workings. (i) Calculate the company's predetermined overhead rate. (2 mark) (ii) Prepare journal entries for the first quarter to record the following (show your calculation for each amount): a. Issue of direct material to production and the direct labour incurred. (8 marks) b. Manufacturing overhead incurred during the quarter. (5 marks) c. Application of the manufacturing overhead to production. (5 marks) d. Completion of job numbers H64 and H65. (7 marks) e. Sale of job H65. (5 marks) Note: Use summary entries where appropriate by combining individual job data (iii) Determine the value (cost) of the Work in Process Inventory as at March 31. (4 marks) Hey Hey Toys Ltd, which uses a job costing system, had two jobs in process at the start of the year: Job number H64 ($84,000) and Job number H65 ($53,500). The following information is available: The company applies manufacturing overhead based on machine hours. Budgeted overhead and machine activity for the year were anticipated to be $845,750 and 17,000 machine hours, respectively. The company worked on four jobs during the first quarter (i.e., from 1 January to 31 March). Direct materials used, direct labour cost incurred, and machine hours consumed were as shown in the following table: Job numbers Direct material Direct labour cost Machine hours H64 $21,000 $35,000 1,200 H65 Nil $22,000 700 H66 $44,500 $65,000 2,000 H67 $15,000 $9,000 500 Manufacturing overhead incurred during the first quarter included accumulated depreciation of $36,000, indirect labour of $60,000, indirect materials used of $50,000 and other factory costs of $139,500. The company completed job number H64 and job number H65 during the first quarter, job number H65 was sold on credit, producing a profit of $34,700 for the firm. Required: Show ALL your workings. (i) Calculate the company's predetermined overhead rate. (2 mark) (ii) Prepare journal entries for the first quarter to record the following (show your calculation for each amount): a. Issue of direct material to production and the direct labour incurred. (8 marks) b. Manufacturing overhead incurred during the quarter. (5 marks) c. Application of the manufacturing overhead to production. (5 marks) d. Completion of job numbers H64 and H65. (7 marks) e. Sale of job H65. (5 marks) Note: Use summary entries where appropriate by combining individual job data (iii) Determine the value (cost) of the Work in Process Inventory as at March 31. (4 marks)