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39 costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning balance Ending balance Raw materials $ 22,000 $ 25,000 Work in process $52,000 $ 34,000 Finished goods $121,000 $ 136,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 40,000 machine-hours and incur $200,000 in manufacturing overhead cost. 39 Activity 2 The following transactions were recorded for the year: •Raw materials were purchased, $412,000. •Raw materials were requisitioned for use in production, $409,000 $(362,000 direct and $47,000 indirect). •The following employee costs were incurred: direct labor, $324,000; indirect labor, $57,000; and administrative salaries, $129,000. Selling costs, $135,000. •Factory utility costs, $22,000. Depreciation for the year was $102,000 of which $94,000 is related to factory operations and $8,000 is related to selling, general, and administrative activities. •Manufacturing overhead was applied to jobs. The actual level of activity for the year was 44,000 machine-hours. •Sales for the year totaled $1,198,000. • Actual M.O.H.C equals to Predetermined/Applied M.O.H.C Required: 1) Prepare the summary journal entries to record the distribution of materials, labor, and overhead costs. 2) Prepare a schedule of cost of goods manufactured in good form. 3) Prepare an income statement for the year in good form.

39 costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning balance Ending balance Raw materials $ 22,000 $ 25,000 Work in process $52,000 $ 34,000 Finished goods $121,000 $ 136,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 40,000 machine-hours and incur $200,000 in manufacturing overhead cost. 39 Activity 2 The following transactions were recorded for the year: •Raw materials were purchased, $412,000. •Raw materials were requisitioned for use in production, $409,000 $(362,000 direct and $47,000 indirect). •The following employee costs were incurred: direct labor, $324,000; indirect labor, $57,000; and administrative salaries, $129,000. Selling costs, $135,000. •Factory utility costs, $22,000. Depreciation for the year was $102,000 of which $94,000 is related to factory operations and $8,000 is related to selling, general, and administrative activities. •Manufacturing overhead was applied to jobs. The actual level of activity for the year was 44,000 machine-hours. •Sales for the year totaled $1,198,000. • Actual M.O.H.C equals to Predetermined/Applied M.O.H.C Required: 1) Prepare the summary journal entries to record the distribution of materials, labor, and overhead costs. 2) Prepare a schedule of cost of goods manufactured in good form. 3) Prepare an income statement for the year in good form.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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39 40 Activity 2 Baba Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning balance Ending balance Raw materials $ 22,000 $ 25,000 Work in process $52,000 $ 34,000 Finished goods $121,000 $ 136,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 40,000 machine-hours and incur $200,000 in manufacturing overhead cost. 39 Activity 2 The following transactions were recorded for the year: •Raw materials were purchased, $412,000. •Raw materials were requisitioned for use in production, $409,000 $(362,000 direct and $47,000 indirect). •The following employee costs were incurred: direct labor, $324,000; indirect labor, $57,000; and administrative salaries, $129,000. *Selling costs, $135,000. Factory utility costs, $22,000. Depreciation for the year was $102,000 of which $94,000 is related to factory operations and $8,000 is related to selling, general, and administrative activities. •Manufacturing overhead was applied to jobs. The actual level of activity for the year was 44,000 machine-hours. •Sales for the year totaled $1,198,000. • Actual M.O.H.C equals to Predetermined/Applied M.O.H.C Required: 1) Prepare the summary journal entries to record the distribution of materials, labor, and overhead costs. 2) Prepare a schedule of cost of goods manufactured in good form. 3) Prepare an income statement for the year in good form. 4) Present the cost flow using T-accounts 40
Transcribed Image Text:39 40 Activity 2 Baba Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning balance Ending balance Raw materials $ 22,000 $ 25,000 Work in process $52,000 $ 34,000 Finished goods $121,000 $ 136,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 40,000 machine-hours and incur $200,000 in manufacturing overhead cost. 39 Activity 2 The following transactions were recorded for the year: •Raw materials were purchased, $412,000. •Raw materials were requisitioned for use in production, $409,000 $(362,000 direct and $47,000 indirect). •The following employee costs were incurred: direct labor, $324,000; indirect labor, $57,000; and administrative salaries, $129,000. *Selling costs, $135,000. Factory utility costs, $22,000. Depreciation for the year was $102,000 of which $94,000 is related to factory operations and $8,000 is related to selling, general, and administrative activities. •Manufacturing overhead was applied to jobs. The actual level of activity for the year was 44,000 machine-hours. •Sales for the year totaled $1,198,000. • Actual M.O.H.C equals to Predetermined/Applied M.O.H.C Required: 1) Prepare the summary journal entries to record the distribution of materials, labor, and overhead costs. 2) Prepare a schedule of cost of goods manufactured in good form. 3) Prepare an income statement for the year in good form. 4) Present the cost flow using T-accounts 40
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