Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of dir

Question

Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company’s production activities during May 2017 follows.

Purchased raw materials on credit, $200,000.

Materials requisitions record use of the following materials for the month.

131,900

Paid $16,000 cash to a computer consultant to reprogram factory equipment.

Time tickets record use of the following labor for the month. These wages were paid in cash.

Applied overhead to Jobs 136, 138, and 139.

Transferred Jobs 136, 138, and 139 to Finished Goods.

Sold Jobs 136 and 138 on credit at a total price of $550,000.

The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

3. Post the journal entries for the transactions to the following T-accounts, each of which started the month with a zero balance.

Job 136 $ 49,500 Job 137 33,000 Job 138 19,600 Job 139 23,000 Job 140 6,800 Total direct materials

131,900

Indirect materials 21,000 Total materials used $ 152,900

Explanation / Answer

Working Note-1

Job No. 136

Raw Materials Inventory A/c Debit Credit Accounts Payable $ 200,000.00 Work In Process Inventory $ 131,900.00 Factory Overhead $    20,000.00 Closing Balance $    48,100.00 Total $ 200,000.00 Total $ 200,000.00

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