The Commodores Company began operations on December 1, 2020. The company uses normal costing as part...

Transcribed Image Text:

The Commodores Company began operations on December 1, 2020. The company uses normal costing as part of a job-order cost system. During December, the company purchased $7,000 of direct material, and then used $1,500 of these direct materials to start Job 100. The company also charged total conversion costs of $3,500 to Job 100 during December. As of the end of December Job 100 was not completed. There was no underapplied or overapplied overhead for December. Cast Driver Becomes, Beg WSP The company charges overhead to jobs using direct labor HOURS. The estimated direct labor hours for 2021 are 125,000 hours and the estimated overhead cost for 2021 is $1,875,000. During 2021, the following transactions occurred. 1. 2. 3. 4. 5. The company purchased $280,000 of direct materials. There were 5 jobs worked on during 2021. Some of the data for these jobs are shown below: Job 100 Job 200 Job 300 Job 400 $120,000 $80,000 Job 500 $7,500 42,000 hrs. 9,000 hrs. 11,000 hrs. $40,000 $15,000 36,000 hrs. 12,000 hrs. LBR Rade His The Direct Labor Rate for 2021 is $20.00 per hour At the end of 2021, the jobs that were not finished were Jobs 200, 400 and 500. Job 100 consisted of 7,500 units of which 7,000 were sold in 2021 at a selling price of $300 each. Job 300 consisted of 6,000 units of which 2,500 were sold in 2021 at a selling price of $400 each. Direct Material Cost Direct Labor Hours Other costs incurred during 2021 Factory Maintenance Expense Indirect Materials Advertising Expense Factory Dep. Expense Factory Insurance Expense include the following: $470,000 $320,000 $ 30,000 $370,000 $ 20,000 Administrative Expenses $620,000 F.G. Warehouse Dep. Exp $290,000 Indirect Labor $780,000 Selling Expenses $450,000 EQUIRED TASKS: Prepare, in good form, a Schedule of Cost of Goods Manufactured for 2021. Add up the total cost of Jobs 100 and Job 300. Does this total equal your Cost of Goods Manufactured amount from Part A? Should it? Compute the underapplied or overapplied overhead for 2021. Assume that any underapplied or overapplied overhead is closed totally to Cost of Goods Sold at the end of 2021. Prepare, in good form, an income statement for 2021. Now assume that we want to allocate (prorate) the underapplied or overapplied overhead to the appropriate accounts at the end of 2021. Remember you must determine how much applied overhead is in WIP and Finished Goods ending inventories as well as Cost of Goods Sold. Assume Finished Goods Inventory has $367,500 of applied overhead in its ending balance, and you know how much applied overhead is on Jobs 200, 400 and 500, you should be able to determine how much applied overhead will be in Cost of Goods Sold at the end of 2021. Prorate the under (over)applied overhead and show how much should be closed to each account. If we prorate the under (over)applied overhead rather than charging it totally to Cost of Goods Sold, would net income for the company increase or decrease? By how much? One way to figure this out would be to just look at the change in the adjustment to Cost of Goods Sold. The Commodores Company began operations on December 1, 2020. The company uses normal costing as part of a job-order cost system. During December, the company purchased $7,000 of direct material, and then used $1,500 of these direct materials to start Job 100. The company also charged total conversion costs of $3,500 to Job 100 during December. As of the end of December Job 100 was not completed. There was no underapplied or overapplied overhead for December. Cast Driver Becomes, Beg WSP The company charges overhead to jobs using direct labor HOURS. The estimated direct labor hours for 2021 are 125,000 hours and the estimated overhead cost for 2021 is $1,875,000. During 2021, the following transactions occurred. 1. 2. 3. 4. 5. The company purchased $280,000 of direct materials. There were 5 jobs worked on during 2021. Some of the data for these jobs are shown below: Job 100 Job 200 Job 300 Job 400 $120,000 $80,000 Job 500 $7,500 42,000 hrs. 9,000 hrs. 11,000 hrs. $40,000 $15,000 36,000 hrs. 12,000 hrs. LBR Rade His The Direct Labor Rate for 2021 is $20.00 per hour At the end of 2021, the jobs that were not finished were Jobs 200, 400 and 500. Job 100 consisted of 7,500 units of which 7,000 were sold in 2021 at a selling price of $300 each. Job 300 consisted of 6,000 units of which 2,500 were sold in 2021 at a selling price of $400 each. Direct Material Cost Direct Labor Hours Other costs incurred during 2021 Factory Maintenance Expense Indirect Materials Advertising Expense Factory Dep. Expense Factory Insurance Expense include the following: $470,000 $320,000 $ 30,000 $370,000 $ 20,000 Administrative Expenses $620,000 F.G. Warehouse Dep. Exp $290,000 Indirect Labor $780,000 Selling Expenses $450,000 EQUIRED TASKS: Prepare, in good form, a Schedule of Cost of Goods Manufactured for 2021. Add up the total cost of Jobs 100 and Job 300. Does this total equal your Cost of Goods Manufactured amount from Part A? Should it? Compute the underapplied or overapplied overhead for 2021. Assume that any underapplied or overapplied overhead is closed totally to Cost of Goods Sold at the end of 2021. Prepare, in good form, an income statement for 2021. Now assume that we want to allocate (prorate) the underapplied or overapplied overhead to the appropriate accounts at the end of 2021. Remember you must determine how much applied overhead is in WIP and Finished Goods ending inventories as well as Cost of Goods Sold. Assume Finished Goods Inventory has $367,500 of applied overhead in its ending balance, and you know how much applied overhead is on Jobs 200, 400 and 500, you should be able to determine how much applied overhead will be in Cost of Goods Sold at the end of 2021. Prorate the under (over)applied overhead and show how much should be closed to each account. If we prorate the under (over)applied overhead rather than charging it totally to Cost of Goods Sold, would net income for the company increase or decrease? By how much? One way to figure this out would be to just look at the change in the adjustment to Cost of Goods Sold.

Answer rating: 100% (QA)

To answer your question lets go through the required tasks step by step 1 Schedule of Cost of Goods Manufactured for 2021 Job 100 Job 200 Job 300 Job 400 Job 500 Total Direct Material Cost 40000 15000 ... View the full answer