Dillon Products manufactures various machined parts to customer specifications.

Question

Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4800,000 in manufacturing overhead cost at an activity level of 240,000 machine-hours The company spent the entire month of January working on a large order for 16.000 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow a. Raw materials purchased on account, $325.000. b Raw materials used in production, $290,000 (80% direct materials and 20% indirect materials). c. Labor cost accrued in the factory, $180,000 (one-third direct labor and two-thirds indirect labor). d. Depreciation recorded on factory equipment, $75,000. e. Other manufacturing overhead costs incurred on account, $62,000 f Manufacturing overhead cost was applied to production on the basis of 15.000 machine-hours actually worked during the month. g. The completed job for 16,000 custom-made machined parts was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead) Required 1. Prepare journal entries to record items (a) through (f) above [ignore item (g) for the moment). 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T accounts. 3. Prepare a journal entry for item (g) above 4. If 10000 of the custom-made machined parts are shipped to the customer in February, how much of this job's cost wll be included in cost of goods sold for February? Complete the question by entering your answers in the tabs below Required 1 Required 2Required a Required 4 Prepare a journal entry for item (9) above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

Transaction                       General Journal                        Debit Credit a. Raw materials inventory 325,000 Accounts payable 325,000 b. Work in process inventory 232000 Manufacturing overhead 58000 Raw materials inventory 290,000 c. Work in process inventory 60,000 Manufacturing overhead 120,000 Factory wages payable 180,000 d. manufacturing overhead 75,000 Accumulated depreciation 75,000 e. Manufacturing overhead 62,000 Accounts paybale 62,000 f. work in process inventory 300000 manufacturing overhead 300,000 (4,800,000/240,000)*15,000 2) Manufacturing overhead b. 58000 300000 f. c. 120,000 d. 75,000 e. 62,000 end bal 15,000 work in process b. 232000 c. 60,000 f. 300000 end bal 592000 3) g. finished goods inventory 592000 Work in process inventory 592000 4) cost of goods sold unit cost 592,000/16000- 37.00 hence cost of goods sold (37*10000)= 370000

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