You work for Thunderduck Custom Tables Inc. This is the first month of operation

Question

You work for Thunderduck Custom Tables Inc. This is the first month of operations. The company designs and manufactures specialty tables. Each table is specially customized for the customer. This month, you have been asked to develop and manufacture two new tables for customers. You will design and build the tables. This is a no nail, no screw, and no glue manufacturing ( no indirect materials used. You will be keeping track of the costs incurred to manufacture the tables using Job #1 Cost Sheet and Job #2 Cost Sheet. Step1 The cost of the direct materials that can be used to manufacture the table are as follows. These cost are on a per unit basis. Table Top Table Leg Drawer $1,000.00 S 150.00 $ 300.00 The company uses a job order costing system and applies manufacturing overhead to jobs based on direct labor hours. The company estimates that there will be 12 direct labor hours worked during the month The estimated manufacturing overhead cost for the month is: a. Factory supervisor salary per month b. Rent for the factory per month c. Depreciation of factory equipment per month $ 2,500.00 S500.00 S600.00 $3,600.00 Total Estimated manufacturing overhead What is the predetermined manufacturing overhead rate? Step 2 Step 3 The first order you received was to manufacture a table using a table top and four legs. This is your Job #1 The customer that has ordered Job #2, wants a table that is the same as Job #1, but wants to also add a drawer to the table.

Explanation / Answer

Step 1 Predetermined manufacturing overhead rate = Total Estimated manufacturing overhead/direct labor hours Predetermined manufacturing overhead rate = $3600/12 $300 Step 2 Job Cost Sheet Job Number JOB1 Date Initiated Item Table Date completed Direct Matarials Direct Labor Manufacturing Overhead Amount Hours Rate Amount Hours Rate Amount Table Top $1,000 6 20 120 6 ($300.00) ($1,800.00) Table Leg = 150 x 4 $600 Cost Summary Direct Materials _(1600_) Direct Labor _(120_) Manufacturing Overhead _(1800_) Total Product Cost _(3520_) Unit Product Cost ($3,520.00) Step 3 Job Cost Sheet Job Number Job 2 Date Initiated Item Table with Drawer Date completed Direct Matarials Direct Labor Manufacturing Overhead Amount Hours Rate Amount Hours Rate Amount Table Top $1,000 3 20 60 3 $300 $900 Table Leg = 150 x 4 $600 Drawer $300 Cost Summary Direct Materials $1,900 Direct Labor $60 Manufacturing Overhead $900 Total Product Cost $2,860 Unit Product Cost $2,860 Step 4 General Journal Date Description Debit Credit Dec 1, 2017 Raw material $10,000 Account payable $10,000 Dec 5, 2017 Work in progess $1,600 Raw material $1,600 Dec 10, 2017 Work in progess $120 Salaries and wages payable $120 Manufacturing overhead $1,800 Salaries and wages payable $1,800 Salaries and wages expense $2,500 Account payable $2,500 Dec 15, 2017 Work in progess $1,900 Raw material $1,900 Dec 16, 2017 Manufacturing overhead $500 Account payable $500 Dec 17, 2017 Advertising expense $1,200 Account payable $1,200 Dec 20, 2017 Manufacturing overhead $150 Accumulated depreciation $150 Depreciation expense $600 Account payable $600 Dec 22, 2017 Work in progress $1,800 Manufacturing overhead $1,800 Dec 26, 2017 Finished goods $3,520 Work in progress $3,520 Dec 28, 2017 Account receivable $15,000 Sales revenue $15,000 Cost of goods sold $3,520 Finished goods $3,520 Dec 31, 2017 Work in progress $60 Salaries and wages payable $60 Work in progress $900 Manufacturing overhead $900 Cost of Goods Sold $50 Manufacturing overhead $50

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