PROBLEM ONE Donnell Transport assembles prestige mobile homes. Manufacturing ove

Question

PROBLEM ONE

Donnell Transport assembles prestige mobile homes. Manufacturing overhead is allocated at a rate of $3 per machine hours. The following information is available:

Raw materials 1/1/13                  $ 12              Materials & supplies purchased             $150

Work in process 1/1/13                       2              Direct labor                                         90      

Finished goods 1/1/13                       6              President’s salary                                  36

Direct materials used                    145              Supplies used                                           10

Depreciation on plant                             19              Indirect factory labor used                     30

Utilities on the factory                        9               Utilities on showroom floor                   29

Sales                                            $400             Finished goods 12/31/13                          8

Raw materials 12/31/13                    ???                 Work in process 12/31/13                     17

Salesperson salary                         25              Property taxes, administration bldg         4

Manufacturing overhead allocated, 21 actual machine hours                                         ??

REQUIRED:

Prepare the journal entries for the above information (15 journal entries).

Show the journal entry to close the over-or-under applied overhead to cost of goods control.

Prepare a cost of goods manufactured statement in good form.

Prepare a cost of goods sold statement in good form.

Prepare an income statement in good form.

Explanation / Answer

a) Amounts in millions Account Titles and Explanation Debit Credit a) Materials Control $150.00 Accounts Payable Control $150.00 b) Work-in-Process Control $145.00 Materials Control $145.00 c) Manufacturing Department Overhead Control $10.00 Materials Control $10.00 d) Work-in-Process Control $90.00 Wages Payable Control $90.00 e) Manufacturing Department Overhead Control $30.00 Wages Payable Control $30.00 f) Manufacturing Department Overhead Control $19.00 Accumulated Depreciation $19.00 g) Manufacturing Department Overhead Control $9.00 Various liabilities $9.00 h) Work-in-Process Control (21 MH x $3) $63.00 Manufacturing Overhead Allocated $63.00 i) Finished Goods Control $283 Work-in-Process Control $283 j) Cost of Goods Sold $281 Finished Goods Control $281 Accounts Receivable Control (or Cash ) $400.00 Cash $400.00 b) Direct Materials Used $145.00 Add: Direct Labor Used $90.00 Add: Manufacturing Overhead $63.00 Add: Beginning Work in Process (WIP) Inventory $2.00 Deduct: Ending Work in Process (WIP) Inventory -$17.00 Cost of goods Manufactured $283.00 c) Beginning Finished Goods $6.00 Add: Cost of goods Manufactured $283.00 Less: Ending Finished goods -$8.00 Cost of Goods Sold $281.00

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