PLEASEEE HELPP!!! During the month of January, Garcia Manufacturing began produc
ID: 2442444 • Letter: P
Question
PLEASEEE HELPP!!!During the month of January, Garcia Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month.
1. Purchased additional raw materials of $90,000 on account.
2. Incurred factory labor costs of $65,000. Of this amount $16,000 related to employer payroll taxes.
3. Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect labor $15,000; depreciation expense $19,000, and various other manufacturing overhead costs on account $20,000.
4. Assigned direct materials and direct labor to jobs as follows.
Job No. Direct Materials Direct Labor
50 $10,000 $ 5,000
51 39,000 25,000
52 30,000 20,000
Hint:
Prepare entries in a job cost system and job cost sheets.
Instructions
(a) Calculate the predetermined overhead rate for 2008, assuming Garcia Manufacturing estimates total manufacturing overhead costs of $1,050,000, direct labor costs of $700,000, and direct labor hours of 20,000 for the year.
(b) Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50.
(c) Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.
(d) Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary.
(e) Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.
(f) Prepare the journal entry (or entries) to record the sale of any job(s) during the month.
(g) What is the balance in the Finished Goods Inventory account at the end of the month? What does this balance consist of?
(h) What is the amount of over- or underapplied overhead?
Explanation / Answer
You have missing information in your question. I am answering on the following assumptions :
Assumptions
1) Predetermined overhead Rate on the basis of direct labor costs
2) On January 1 Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows:
Direct materials $20,000
Direct labor $12,000
Manufacturing overhead $16,000
(a) Calculate the predetermined overhead rate for 2008, assuming Garcia Manufacturing estimates total manufacturing overhead costs of $1,050,000, direct labor costs of $700,000, and direct labor hours of 20,000 for the year.
Predetermined overhead rate based on direct labor cost
= $1,050,000 / $700,000 = 150% of Direct labor cost
(b) Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50.
Gracia Manufacturing
Job Cost Sheet
Company : .........................
Address : .........................
Job No. : 50 Job details :.......................
Date Promised : ..........................
Date Started : ..........................
Date Finished : ..........................
Cost Summary
Materials
Labor
Overhead
_______________________________________________________
Direct Materials Direct Labor Manuf. Overhead
_______________________________________________________
Date Req. # Cost Date Ticket Cost Date Rate Cost
Jan.1 xx $20,000 Jan.1 xx $12,000 Jan.1 $16,000
$10,000 $5,000 $7,500
Total $30,000 $17,000 $23,500
_______________________________________________________
Gracia Manufacturing
Job Cost Sheet
Company : .........................
Address : .........................
Job No. : 51 Job details :.......................
Date Promised : ..........................
Date Started : ..........................
Date Finished : ..........................
Cost Summary
Materials
Labor
Overhead
____________________________________________________
Direct Materials Direct Labor Manuf. Overhead
____________________________________________________
Date Req. # Cost Date Ticket Cost Date Rate Cost
Total
____________________________________________________
Gracia Manufacturing
Job Cost Sheet
Company : .........................
Address : .........................
Job No. : 52 Job details :.......................
Date Promised : ..........................
Date Started : ..........................
Date Finished : ..........................
Cost Summary
Materials
Labor
Overhead
____________________________________________________
Direct Materials Direct Labor Manuf. Overhead
____________________________________________________
Date Req. # Cost Date Ticket Cost Date Rate Cost
Total
____________________________________________________
(c) Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.
Raw Materials Inventory $90,000
Accounts Payables $90,000
To record purchase of RM
_____________________________________________
Factory Wages $65,000
Factory Wages Payable $49,000
Employer payroll tax Payable $16,000
To record factory wages incurred for Jan.
______________________________________________
Indirect Materials $17,000
Indirect labor $15,000
Depreciation expense $19,000
Other Manufacturing Overheads $20,000
Accounts payables $37,000
Indirect Wages Payable $15,000
Accumulated Depreciation $19,000
To record manufacturing overheads incurred for Jan.
_______________________________________________
(e) Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.
Cost Summary - Job 50
Materials $30,000
Labor $17,000
Overhead $23,500
Total Cost $70,500
=========
_____________________________________________
Finished goods Inventory $70,500
WIP Inventory (Job 50) $70,500
To record completion of Job 50
____________________________________________
(f) Prepare the journal entry (or entries) to record the sale of any job(s) during the month.
______________________________________________
Accounts Receivables $158,000
Sales $158,000
To record sale of Job 50
______________________________________________
(g) What is the balance in the Finished Goods Inventory account at the end of the month? What does this balance consist of?
Job 51 remains in FG Inventory accounts and consists of the following :
Direct Material $39,000
Direct Labor $25,000
Applied Overheads $37,500
Total $101,500
=========
(h) What is the amount of over- or underapplied overhead?
Overhead incurred (17,000+15,000+19,000+20,000) $71,000
Less : Overheads applied
Job 50 $23,500
Job 51 25,000x150% $37,500
Job 52 20,000x150% $30,000 $91,000
Over applied overhead $20,000
=========
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