Dillon Products applies overhead cost to jobs on the basis of machine-hours. At

Question

Dillon Products applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a manufactures various machined parts to customer specifications. The company uses a job-order costing system cost formula to 230,000 in manufacturing overhead cost at an activity level of 564,000 machine-hours The company spent the entire month of January working on a large order for 12.600 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow a Raw materials purchased on account, $321,00O b. Raw materials used in production, $256,000 (80% direct materials and 20% indirect materials). c Labor cost accrued in the factory, $159,000 (one-third direct labor and two-thirds indirect labor) d. Depreciation recorded on factory equipment, $62.500 e. Other manufacturing overhead costs incurred on account, $85,500 f. Manufacturing overhead cost was applied to production on the basis of 40,750 machine-hours actually worked during the month g. The completed job for 12600 custom-made machined parts was moved into the finished goods warehouse on January 31 to awalt 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) Required 1. Prepare journal entries to record items (a) through (f) above [ignore item (g) for the moment) accounts 3. Prepare a journal entry for item (g) above in cost of goods sold for February? 2 Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T mer in February, how much of this job's cost will be included Prev 10 of 10 Next ENG

Explanation / Answer

1.

2. Manufacturing overhead

Work in process

3.   

4. Unit product cost = cost of finished goods / number of units produces

   = $563425 / 12600

= $44.72 per unit

Cost of goods sold for 10800 units = $44.72 * 10800

= $482976

Accounts title Dr. Cr. a Raw materials 321000 To Accounts payable 321000 b Work in process [256000*80%] 204800 Manufacturing overhead [256000*20%] 51200 To Raw materials 256000 c Work in process [159000*1/3] 53000 Manufacturing overhead [159000*2/3] 106000 To wages and salaries payable 159000 d Manufacturing overhead 62500 To Accumulated depreciation 62500 e Manufacturing overhead 85500 To Accounts payable 85500 f Work in process    305625 To Manufacturing overhead [4230000 / 564000 hours * 40750 hours ] 305625

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