Dillon Products manufactures various machined parts to customer specifications.
ID: 2419812 • Letter: D
Question
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead costs 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 $4,800,000 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:
Manufacturing overhead cost was applied to production on the basis of 15,000 machine-hours actually worked during the month.
The completed job 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.)
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.Compute the unit product cost that will appear on the job cost sheet.
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead costs 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 $4,800,000 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:
Explanation / Answer
1. Journal Entries:
2. T-accounts :
3.Journal Entry:
Debit Finished Goods Inventory $ 592000
Credit Work in process $592000
(being 16000 units transferred finished goods inventory)
4. the unit product cost = $592000 / 16000 = $37 per unit
Date Accounts Title and explanation Debit $ Credit $ a Raw Materials 325000 Accounts Payable 325000 b Work in process 232000 Manufacturing Overhead 58000 Raw Materials 290000 c Work in process 60000 Manufacturing Overhead 120000 Wages Payable 180000 d Manufacturing Overhead 75000 Depreciation - Factory equipment 75000 e Manufacturing Overhead 62000 Accounts Payable 62000 f Work in process 300000 Manufacturing Overhead 300000Related Questions
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