Southworth Company uses a job-order costing system and applies manufacturing ove

Question

Southworth Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $252,800 of manufacturing overhead for an estimated allocation base of $158,000 direct material dollars. The following transactions took place during the year (all purchases and services were acquired on account): a. Raw materials purchased, $149,000. b. Raw materials requisitioned for use in production (all direct materials), $150,000. c. Utility bills incurred in the factory, $21,000. d. Costs for salaries and wages were incurred as follows: Direct labor $ 215,000 Indirect labor $ 94,100 Selling and administrative salaries $ 142,000 e. Maintenance costs incurred in the factory, $20,000. f. Advertising costs incurred, $126,000. g. Depreciation recorded for the year, $47,000 (70% relates to factory assets, and the remainder relates to selling and administrative assets). h. Rental cost incurred on buildings, $85,000 (90% of the space is occupied by the factory, and 10% is occupied by sales and administration). i. Miscellaneous selling and administrative costs incurred, $15,000. j. Manufacturing overhead cost was applied to jobs, $ ? k. Cost of goods manufactured for the year, $554,000. l. Sales for the year (all on account) totaled $1,200,000. These goods cost $550,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were as follows: Raw materials $ 15,000 Work in process $ 26,000 Finished Goods $ 33,000 I got all of the t charts right: Accounts receivable: $1,200,000 Raw materials: $14,000 Work in process: 77,000 Finished goods: 37,000 Manufacturing overhead 4500 Accounts payable 416,000 Accumulated depreciation 47,000 Depreciation expense: 14,100 Salaries and wages payable: 451,100 Selling and Admin salaries: 142,000 Miscellaneous expenses: 15,000 Advertising: 126,000 Rent: 8,500 COGS: 150,000 Sales: 1,200,000 COGM: 554,000 Adjusted COGS: 554,500 Net income: 339,900 I cant figure out this last question below: Job 218 was one of the many jobs started and completed during the year. The job required $3,200 in direct materials and 400 hours of direct labor time at a rate of $12 per hour. If the job contained 570 units and the company billed at 75% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer?

Explanation / Answer

Southworth Company uses a job-order costing system and applies manufacturing
cost to jobs on the basis of the cost of direct materials used in production. At the
beginning of the current year, the following estimates were made for the purpose
of computing the predetermined overhead rate:
Estimated
Manufacturing overhead cost $248,000
Direct materials cost $155,000
MOH rate $1.60 160%

The following transactions took place during the year (all purchases and services
were acquired on account):
a. Raw materials purchased $142,000
b. Raw materials requisitioned for use in production (all DM) $150,000
c. Utility bills incurred in the factory $21,000

d. Costs for salaries and wages were incurred as follows:
Direct labor $216,000
Indirect labor $90,000
Selling and Administrative Salaries $145,000

e. Maintenance costs incurred in the factory $15,000
f. Advertising costs incurred $130,000
g. Depreciation recorded for the year $50,000
90% relates to factory assets $45,000
10% relates to Selling & Administrative $5,000
h. Rental cost incurred on buildings $90,000
80% is factory related $72,000
20% is selling & administrative related $18,000
i. Misc. selling & administrative costs $17,000
j. Manufacturing overhead cost applied to jobs ?
k. Cost of goods manufactured for the year $590,000
l. Sales for the year on account $1,000,000
Cost of goods sold (from job cost sheets) $600,000

Inventory balances at the beginning of the year
Raw materials $18,000
Work in Process $24,000
Finished Goods $35,000


Debit


a. Raw Materials Inventory 142,000
Accounts Payable
To record purchase of direct materials

b. Work In Process Inventory, Job #???? 150,000
Raw Materials Inventory
To record materials requisitions

c. Manufacturing Overhead 21,000
Accounts Payable
To record factory utilities

d. Work-in-Process Inventory, Jobs #???? 216,000
Manufacturing Overhead 90,000
Selling and Administrative Salaries Expense 145,000
Wages and Salaries Payable
To record payroll

e. Manufacturing Overhead 15,000
Accounts Payable
To record factory maintenance

f. Advertising Expense 130,000
Accounts Payable
To record advertising expense incurred

g. Manufacturing Overhead 45,000
Depreciation Expense, Selling & Administrative 5,000
Accumulated Depreciation, Selling & Administrative
Accumulated Depreciation, Factory
To record depreciation

h. Manufacturing Overhead 72,000
Rental Expense 18,000
Accounts Payable
To record cost of rent

i. Misc. Selling and Administrative Expense 17,000
Accounts Payable
To record misc. selling & administrative expense

j. Work In Process Inventory, Job #???? 240,000
Manufacturing Overhead
To record the application of MOH

k. Finished Goods Inventory 590,000
Work In Process Inventory, Job #????
To record completed goods transferred to FG

l. Accounts Receivable, Name??? 1,000,000
Sales
To record sales on account

Cost of Goods Sold 600,000
Finished Goods
To record cost of goods sold


Overhead account to COGS.

m. Cost of Goods Sold 3,000
Manufacturing Overhead
To close the Manufacturing Overhead Account


inventory accounts and in the manufacturing overhead account.

Raw Materials Inventory Manufacturing Overhead
BB 18,000 BB 0
a. 142,000 c. 21,000
b. 150,000 d. 90,000
EB 10,000 e. 15,000
g. 45,000
h. 72,000
243,000 j. 240,000
B 3,000
m. 3,000
EB 0

Work In Process Inventory Accounts Payable
BB 24,000 BB ??
b. 150,000 a. 142,000
d. 216,000 c. 21,000
j. 240,000 e. 15,000
k. 590,000 f. 130,000
40,000 h. 90,000
i. 17,000
415,000

Finished Goods Inventory Wages & Salaries Payable
BB 35,000 BB 0
k. 590,000 d. 451,000
l. 600,000
25,000


Accounts Receivable Sales
BB ?? BB 0
l. 1,000,000 l. 1,000,000



Cost of Goods Sold S & A. Salaries Expense
BB 0 BB 0
l. 600,000 d. 145,000
m. 3,000
603,000

Advertising Expense Depreciation Exp., S & A
BB 0 BB 0
f. 130,000 g. 5,000


Acc. Depr., Selling & Admin. Acc. Depreciation, Factory
BB 0 BB 0
g. 5,000 g. 45,000


Rental Expense Misc. Selling & Admin. Exp.
BB 0 BB 0
h. 18,000 i. 17,000



Southworth Company
Schedule of Cost of Goods Manufactured
For the Period ended on ___________

Raw Material Inventory, Beginning $18,000
Plus: Purchases of raw materials during period 142,000
Raw material available for use during period $160,000
Less: Raw Material Inventory, Ending 10,000
Raw material used in production $150,000
Direct labor incurred during period 216,000
Manufacturing overhead applied to work in process 240,000
Total Manufacturing Costs Added to Production $606,000
Plus: Work-in-Process Inventory, Beginning Balance 24,000
Total manufacturing costs to account for $630,000
Less: Work-in-Process Inventory, Ending Balance 40,000
Cost of Goods Manufactured $590,000


Overhead account to Cost of Goods Sold.

See J/E " m." above.

Prepare a schedule of cost of goods sold.

Southworth Company
Schedule of Cost of Goods Sold
For the Period ended on ___________

Finished Goods Inventory, beginning $35,000
Plus: Cost of Goods Manufactured 590,000
Cost of Goods Available for Sale $625,000
Less: Finished Goods Inventory, ending (25,000)
Unadjusted Cost of Goods Sold $600,000
Plus: Underapplied manufacturing overhead 3,000
Adjusted Cost of Goods Sold $603,000



Southworth Company
Statement of Income
For the Period ended on ___________

Sales $1,000,000
Less: Adjusted Cost of Goods Sold 603,000
Gross Margin $397,000
Selling and Administrative Expenses:
Salaries Expense $145,000
Advertising Expense 130,000
Depreciation Expense 5,000
Rent Expense 18,000
Miscellaneous Expense 17,000 315,000
Net Operating Income $82,000

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