Skippy Scooters manufactures motor scooters. The company has automated productic so it allocates manufacturing overhead based...

 

Transcribed Image Text:

Skippy Scooters manufactures motor scooters. The company has automated productic so it allocates manufacturing overhead based on machine hours. Skippy expects to in- cur $240,000 of manufacturing overhead costs and to use 4,000 machine hours durin 2015. At the end of 2014, Skippy reported the following inventories: Raw Materials Inventory Work-in-Process Inventory Finished Goods Inventory $ 20,000 17,000 11,000 During January 2015, Skippy actually used 300 machine hours and recorded the follo ing transactions: a. Purchased materials on account, $31,000 b. Used direct materials, $39,000 c. Manufacturing wages incurred totaled $40,000, of which 90% was direct labor a 10% was indirect labor d. Used indirect materials, $3,000 e. Incurred other manufacturing overhead on account, $13,000 f. Allocated manufacturing overhead for January 2015 g. Cost of completed motor scooters, $100,000 h. Sold scooters on account, $175,000; cost of scooters sold, $95,000 Requirements 1. Compute Skippy's predetermined overhead allocation rate for 2015. 2. Journalize the transactions in the general journal. Use the following accounts: Accounts Receivable, Raw Materials Inventory, Work-in-Process Inventory, Finish Goods Inventory, Accounts Payable, Wages Payable, Sales Revenue, Manufacturin Overhead, and Cost of Goods Sold. 3. Enter the beginning balances and then post the transactions to the T-accounts. 4. Adjust Manufacturing Overhead for the overallocated or underallocated overhead. Post your entry to the T-accounts. 5. What are the ending balances in the three inventory accounts and in Cost of Goods Sold? Skippy Scooters manufactures motor scooters. The company has automated productic so it allocates manufacturing overhead based on machine hours. Skippy expects to in- cur $240,000 of manufacturing overhead costs and to use 4,000 machine hours durin 2015. At the end of 2014, Skippy reported the following inventories: Raw Materials Inventory Work-in-Process Inventory Finished Goods Inventory $ 20,000 17,000 11,000 During January 2015, Skippy actually used 300 machine hours and recorded the follo ing transactions: a. Purchased materials on account, $31,000 b. Used direct materials, $39,000 c. Manufacturing wages incurred totaled $40,000, of which 90% was direct labor a 10% was indirect labor d. Used indirect materials, $3,000 e. Incurred other manufacturing overhead on account, $13,000 f. Allocated manufacturing overhead for January 2015 g. Cost of completed motor scooters, $100,000 h. Sold scooters on account, $175,000; cost of scooters sold, $95,000 Requirements 1. Compute Skippy's predetermined overhead allocation rate for 2015. 2. Journalize the transactions in the general journal. Use the following accounts: Accounts Receivable, Raw Materials Inventory, Work-in-Process Inventory, Finish Goods Inventory, Accounts Payable, Wages Payable, Sales Revenue, Manufacturin Overhead, and Cost of Goods Sold. 3. Enter the beginning balances and then post the transactions to the T-accounts. 4. Adjust Manufacturing Overhead for the overallocated or underallocated overhead. Post your entry to the T-accounts. 5. What are the ending balances in the three inventory accounts and in Cost of Goods Sold?

Answer rating: 100% (QA)

Question 1 overhead allocation rate for 2015 240000 4000 60 per Machine Hour 2 JOURNAL Date Particul... View the full answer