ACC-653 Topic 1 Job-Order Costing Assignment
Assessment Description
Complete Problem 3-57 and Case 3-62 in the textbook.
All parts of the problem should be prepared in an Excel workbook with each problem/case on a separate tab.
You are not required to submit this assignment to LopesWrite.
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Problem 3–57
Comprehensive Job-Order Costing Problem
Scholastic Brass Corporation manufactures brass musical instruments for use by high school students. The company uses a normal costing system, in which manufacturing overhead is applied on the basis of direct-labor hours. The company’s budget for the current year included the following predictions.
Budgeted total manufacturing overhead $426,300
Budgeted total direct-labor hours (based on practical capacity) 20,300
During March, the firm worked on the following two production jobs:
Job number T81, consisting of 76 trombones
Job number C40, consisting of 110 cornets
The events of March are described as follows:
- One thousand square feet of rolled brass sheet metal were purchased on account for $5,000. b. Four hundred pounds of brass tubing were purchased on account for $4,000.
c. The following requisitions were submitted on March 5:
Requisition number 112: 250 square feet of brass sheet metal at $5 per square foot (for job number T81)
Requisition number 113: 1,000 pounds of brass tubing, at $10 per pound (for job number C40)
Requisition number 114: 10 gallons of valve lubricant, at $10 per gallon
All brass used in production is treated as direct material. Valve lubricant is an indirect material.
- An analysis of labor time cards revealed the following labor usage for March.
Direct labor: Job number T81, 800 hours at $20 per hour
Direct labor: Job number C40, 900 hours at $20 per hour
Indirect labor: General factory cleanup, $4,000
Indirect labor: Factory supervisory salaries, $9,000
- Depreciation of the factory building and equipment during March amounted to $12,000.
- Rent paid in cash for warehouse space used during March was $1,200.
- Utility costs incurred during March amounted to $2,100. The invoices for these costs were received, but the bills were not paid in March.
- March property taxes on the factory were paid in cash, $2,400.
- The insurance cost covering factory operations for the month of March was $3,100. The insurance policy had been prepaid.
- The costs of salaries and fringe benefits for sales and administrative personnel paid in cash during March amounted to $8,000.
- Depreciation on administrative office equipment and space amounted to $4,000.
- Other selling and administrative expenses paid in cash during March amounted to $1,000.
- Job number T81 was completed on March 20.
- Half of the trombones in job number T81 were sold on account during March for $700 each.
The March 1 balances in selected accounts are as follows:
Cash $ 10,000
Accounts Receivable 21,000
Prepaid Insurance 5,000
Raw-Material Inventory 149,000
Manufacturing Supplies Inventory 500
Work-in-Process Inventory 91,000
Finished-Goods Inventory 220,000
Accumulated Depreciation: Buildings and Equipment 102,000
Accounts Payable 13,000
Wages Payable 8,000
Required:
- Calculate the company’s predetermined overhead rate for the year.
- Prepare journal entries to record the events of March.
- Set up T-accounts, and post the journal entries made in requirement (2).
- Calculate the overapplied or underapplied overhead for March.
- Prepare a journal entry to close this balance into Cost of Goods Sold.
- Prepare a schedule of cost of goods manufactured for March.
- Prepare a schedule of cost of goods sold for March. Prepare an income statement for March.
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Case 3-62
Cost Flows in a Job-Order Costing System; Schedule of Cost of Goods Manufactured: Automation
FiberCom, Inc., a manufacturer of fiber optic communications equipment, uses a job-order costing system. Since the production process is heavily automated, manufacturing overhead is applied on the basis of machine hours using a predetermined overhead rate. The current annual rate of $15 per machine hour is based on budgeted manufacturing overhead costs of $1,200,000 and a budgeted activity level of 80,000 machine hours (the company’s estimated practical capacity). Operations for the year have been completed, and all of the accounting entries have been made for the year except the application of manufacturing overhead to the jobs worked on during December, the transfer of costs from Work-in-Process to Finished-Goods for the jobs completed in December, and the transfer of costs from Finished Goods to Cost of Goods Sold for the jobs that have been sold during December. Summarized data as of November 30 and for the month of December are presented in the following table. Jobs T11-007, N11-013, and N11-015 were completed during December. All completed jobs except Job N11-013 had been turned over to customers by the close of business on December 31.
Required:
1) Explain why manufacturers use a predetermined overhead rate to apply manufacturing overhead to their jobs.
2) How much manufacturing overhead would FiberCom have applied to jobs through November 30 of the year just completed?
3) How much manufacturing overhead would have been applied to jobs during December of the year just completed?
4) Determine the amount by which manufacturing overhead is overapplied or underapplied as of December 31 of the year just completed.
5) Determine the balance in the Finished-Goods Inventory account on December 31 of the year just completed.
6) Prepare a Schedule of Cost of Goods Manufactured for FiberCom, Inc. for the year just completed. (Hint: In computing the cost of direct material used, remember that FiberCom includes both direct and indirect material in its Raw-Material Inventory account.)
Course: ACC-653 Advanced Managerial and Cost Accounting
School: Grand Canyon University
- 22/09/2021
- 175
