10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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AccountingQ&A LibraryThe Harriott manufacturing company uses job order costing system. The company uses machine hours to apply overhead cost to jobs. At the beginning of 2020, the company estimated that 31,400 machine hours would be worked and $5,024,000 overhead cost would be incurred during 2020. The following activities took place in the work in process inventory during February: WIP Inventory A/C November 1 Bal. b/f Direct Materials Used $51,250 256,400 Other transactions incurred: ▪ Indirect material issued to production was $40,360 ▪ Total manufacturing labour incurred in November was $368,000, 75% of this amount represented direct labour. ▪ Other manufacturing overhead costs incurred for November amounted to $340,490. ▪ Two jobs were completed with total costs of $384,000 & $270,000 respectively. They were sold on account at a margin of 33⅓% on sales. Required: i) Compute Harriott’s predetermined manufacturing overhead rate for 2020. ii) State the journal entries necessary to record the above transactions in the general journal: a) For direct materials used in November b) For indirect material issued to production in November c) For total manufacturing labour incurred in November d) To assign manufacturing labour to the appropriate accounts e) For other manufacturing overhead incurred f) For manufacturing overhead applied to production for November, given that Harriott manufacturing company worked 2,860 machine hours. g) To move the completed jobs into finished goods inventory h) To sell the two completed jobs on account iii) Calculate the manufacturing overhead variance for Harriott and state the journal entries necessary to dispose of the variance. iv) What is balance on the Cost of Goods Sold account after the adjustment v) Calculate the gross profit earned by Harriott on the jobs completed. vi) Determine the balance in work in process inventory on November 30

The Harriott manufacturing company uses job order costing system. The company uses machine hours to apply overhead cost to jobs. At the beginning of 2020, the company estimated that 31,400 machine hours would be worked and $5,024,000 overhead cost would be incurred during 2020. The following activities took place in the work in process inventory during February: WIP Inventory A/C November 1 Bal. b/f Direct Materials Used $51,250 256,400 Other transactions incurred: ▪ Indirect material issued to production was $40,360 ▪ Total manufacturing labour incurred in November was $368,000, 75% of this amount represented direct labour. ▪ Other manufacturing overhead costs incurred for November amounted to $340,490. ▪ Two jobs were completed with total costs of $384,000 & $270,000 respectively. They were sold on account at a margin of 33⅓% on sales. Required: i) Compute Harriott’s predetermined manufacturing overhead rate for 2020. ii) State the journal entries necessary to record the above transactions in the general journal: a) For direct materials used in November b) For indirect material issued to production in November c) For total manufacturing labour incurred in November d) To assign manufacturing labour to the appropriate accounts e) For other manufacturing overhead incurred f) For manufacturing overhead applied to production for November, given that Harriott manufacturing company worked 2,860 machine hours. g) To move the completed jobs into finished goods inventory h) To sell the two completed jobs on account iii) Calculate the manufacturing overhead variance for Harriott and state the journal entries necessary to dispose of the variance. iv) What is balance on the Cost of Goods Sold account after the adjustment v) Calculate the gross profit earned by Harriott on the jobs completed. vi) Determine the balance in work in process inventory on November 30

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Question

The Harriott manufacturing company uses job order costing system. The company uses machine
hours to apply overhead cost to jobs. At the beginning of 2020, the company estimated that 31,400
machine hours would be worked and $5,024,000 overhead cost would be incurred during 2020.
The following activities took place in the work in process inventory during February:
WIP Inventory A/C
November 1 Bal. b/f
Direct Materials Used
$51,250
256,400
Other transactions incurred:
▪ Indirect material issued to production was $40,360
▪ Total manufacturing labour incurred in November was $368,000, 75% of this amount
represented direct labour.
▪ Other manufacturing overhead costs incurred for November amounted to $340,490.
▪ Two jobs were completed with total costs of $384,000 & $270,000 respectively. They were
sold on account at a margin of 33⅓% on sales.
Required:

iv) What is balance on the Cost of Goods Sold account after the adjustment
v) Calculate the gross profit earned by Harriott on the jobs completed.
vi) Determine the balance in work in process inventory on November 30.

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