Purl of Great Price Company Maria Young is the sole stockholder of Purl of Great

Question

Purl of Great Price Company Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year and employs three itters each o whom work 40 hours per week and one office manager/ O supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month. Each knitter has a knitting machine that is used about 2/3 of the knitter's time, the rest of the knitter's time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value Required: 1. Review the data in the Predetermined Fectory Overhead Rate panel, and compute the predetermined factory overhead rate for POGP Company. 2. On December 10, POGP Company receives an order for 200 sweater vests and 88Signs Job 8310 e order Review the Materia sRegust on pane Purl of Great Price Company panel A Journalize the entry to record the addition of the materials to Work in Process. 8. On the Joh Cost Sheets pane, add the materials to the Job Cost Sheet for Job 83 3. On December 15, review the source documents on the Time Tickets panel A Journsze the entry to record the addition of direct labor to Work in Process for the perod December 1 through December B. Journalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15.* C. On the Job Cost Sheets pane, add the sppropriste smount of airect iabor and factory overhesd costs to the Job Cost Sheet for Job 62 for the penod December 1 through December 13 4. On December 21, Job 62 is compieted. Review the Job Cost Sheets panel and your journal entries. Journalize the entry to move the associated costs to the Fiished Goods accou 5. On December 22, 75 of the 100 sweaters from Job 62 are sold on account for $125 each. Journalize the following transactions: A The entry to record the sale. B. The entry to record the transfer of costs from Finished Goods to Cost of Goods Sol

Explanation / Answer

Estimated Selected Amounts for the Year Estimated depreciation on equipment $1,200 Estimated total Office Manager/Knitting Supervisor wages (30000*20/40) $15,000 Estimated factory utilities $4,800 Estimated factory rent $18,000 Total estimated factory overhead $39,000 Estimated number of DLH for the year 5,000 Ans 1 Predetermined factory overhead rate 7.8 39000/5000 Job 62 100 units: Sweaters Direct Materials Direct Labor Factory Overhead Total Balance Dec. 1 $5,000 $300 $104 $5,404 Dec. 15 3000 1560 4560 975+1125+900 (65+75+60)*7.8 Total Cost $5,000 $3,300 $1,664 $9,964 Unit Cost Job 83 200 units: Sweater vests Direct Materials Direct Labor Factory Overhead Total Job Cost Balance Dec. 1 $0 $0 $0 $0 Dec. 10 0 0 0 0 Dec. 31 3500 4500 2340 10340 Total Cos 1545+1320+1635 (103+88+109)*7.8 Date Accounts Title Dr Cr 10-Dec Work In process 3500 Material 3500 2 B) added in job cost sheet see above 3 Work In process 3000 Dec1-Dec15 Wages Expenses 3000 b Work In process 1560 Factory Overhead 1560 c) added to cost sheet 4 Finished Goods $9,964 21-Dec Work In process $9,964 5 Accounts Receivable (75*125) 9375 22-Dec Sales 9375 Cost of good sold (9964/100*75) $7,473 Finished Goods $7,473 6 Dec 16-31 Work In process 4500 a Wages Expenses 4500 b Work In process 2340 Factory Overhead 2340 c) added to cost sheet 7 Factory Overhead 60 Accumulated depreciation-equipment (2400+4800)/120*1 60 b Wage expenses (7500+(12500/2)) 8750 Factory overhead (30000/12*20/40) 1250 Cash 10000 (7500+ supervisor salary (30000/12=2500)= 10000 Wages Job 62 (65+75+60)*15 3000 Job 83 (103+88+109)*15 4500 c Factory Overhead 1500 Cash 1500 d Factory Overhead 1275 Cash 1500 Factory overhead Underapplied Actual (1500+1275+1250) 4025 Applied overhead (1560+2340)+15 3915 Underapplied 110 see below working T account Factory Overhead Applied 4025 Opening bal 15 WIP 3900 ending balance 110 8 Cost of good sold 110 Factory Overhead 110 9 A. Materials (5000-3500) 1500 B. Work in Process 10340 C. Finished Goods (9964-7473) 2491 D. Factory Overhead 0 E. Cost of Goods Sold (7473+110) 7583

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