The University of ManchesterManchester Press is wholly owned by the university.
ID: 2545750 • Letter: T
Question
The University of
ManchesterManchester
Press is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the press were an outside business enterprise. The press also publishes and maintains a stock of books for general sale. The press uses normal costing to cost each job. Itsjob-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing overhead, allocated on the basis of direct manufacturing labor costs). The following data (in thousands) pertain to
20172017:
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Direct materials and supplies purchased on credit
$840
Direct materials used
720
Indirect materials issued to various production departments
100
Direct manufacturing labor
1,310
Indirect manufacturing labor incurred by various production departments
980
Depreciation on building and manufacturing equipment
430
Miscellaneous manufacturing overhead* incurred by various production departments
(ordinarily would be detailed as repairs, photocopying, utilities, etc.)
530
Manufacturing overhead allocated at 160% of direct manufacturing labor costs
?
Cost of goods manufactured
4,130
Revenues
8,100
Cost of goods sold (before adjustment for under- or overallocated manufacturing overhead)
4,030
Inventories, December 31, 2016 (not 2017):
Materials Control
180
Work-in-Process Control
50
Finished Goods Control
580
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.Requirement 1. Identify the components of the overview diagram of the job-costing system at the University of
ManchesterManchester
Press.
A
}
B
down arrow
A
Indirect Cost Pool
B
Manufacturing Overhead
C
}
D
down arrow
C
Cost Allocation Base
D
Direct Manufacturing Labor Cost
E
}
F
G
E
Cost Object: Print Job
F
Indirect Costs
G
Direct Costs
H
}
up arrow
I
up arrow
J
H
Direct Costs
I
Direct Materials
J
Direct Manufacturing Labor
Requirement 2. Prepare journal entries to summarize the
20172017
transactions. As your final entry, dispose of the year-end under- or overallocated manufacturing overhead as a write-off to Cost of Goods Sold. Number your entries. Explanations for each entry may be
omitted.(Record
debits first, then credits. Exclude explanations from any journal entries.)Direct materials and supplies purchased on credit,
$ 840$840.
Journal Entry
Accounts
Debit
Credit
(In thousands)
(1)
Materials Control
840
Accounts Payable Control
720
100
Accounts Payable Control
1660
Choose from any list or enter any number in the input fields and then click Check Answer.
A
}
B
down arrow
A
Indirect Cost Pool
B
Manufacturing Overhead
C
}
D
down arrow
C
Cost Allocation Base
D
Direct Manufacturing Labor Cost
E
}
F
G
E
Cost Object: Print Job
F
Indirect Costs
G
Direct Costs
Explanation / Answer
Answer 1. A. Indirect Cost Pool B. Manufacturing Overhead C. Cost Allocation Base D. Direct Manufacturing Labor E. Cost Objects: Print Jobs F. Indirect Costs G. Direct Costs H. Direct Costs I. Direct Materials J. Direct Manufacturing Labor Answer 2. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Material Control 840.00 Accounts Payable Control 840.00 2 WIP Control 720.00 Material Control 720.00 3 Manufacturing Overhead Control 100.00 Material Control 100.00 4 WIP Control 1,310.00 Manufacturing Overhead Control 980.00 Wages Payable Control 2,290.00 5 Manufacturing Overhead Control 430.00 Accumulated Depreciation - Plant & Equip. 430.00 6 Manufacturing Overhead Control 530.00 Various Liabilities 530.00 7 WIP Control 2,096.00 Manufacturing Overhead Allocated 2,096.00 Manufacturing Overhead Allocated = 160% X $1,310 (DL Costs) Manufacturing Overhead Allocated = $2,096 8 Finished Goods Control 4,130.00 WIP Control 4,130.00 9 Accounts Receivable / Cash 8,100.00 Sales Revenue 8,100.00 10 Cost of Goods Sold 4,030.00 Finished Goods Inventory 4,030.00 11 Manfacturing Overhead Allocated 2,096.00 Manufacturing Overhead Control 1,940.00 Cost of Goods Sold 156.00 Answer 3. Material Control WIP Control Manufacturing Overhead Control Beg. Bal. 180.00 720.00 2 Beg. Bal. 50.00 3 100.00 1,940.00 11 1 840.00 100.00 3 2 720.00 4,130.00 8 4 980.00 4 1,310.00 5 430.00 7 2,096.00 6 530.00 End. Bal. 200.00 End. Bal. 46.00 End. Bal. 100.00 Finished Goods Control Cost of Goods Sold Manufacturing Overhead Allocated Beg. Bal. 580.00 4,030.00 10 10 4,030.00 156.00 11 11 2,096.00 2,096.00 7 8 4,130.00 End. Bal. 680.00 End. Bal. 3,874.00 End. Bal. -
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