Carib Tings & More does hand-crafted memorabilia for the tourism industry, in which each batch ofitems is a job. The company has a highly machine intensive production process, so it allocatesmanufacturing overhead based on machine hours. Carib Tings & More pre-determined overheadapplication rate for 2024 was computed from the following data: Total estimated factory overheadsTotal estimated machine hours $2,400,00040,000 At the end of May 2024, Carib Tings & More reported work in process inventory of $176,000.During June 2024, Carib Tings & More actually used 3,000 machine hours and recorded thefollowing transactions.i) Purchased $324,000 worth of materials on account. Separately, Carib Tings &More paid a $2,500 bill for freight in.ii) Manufacturing wages incurred $400,000iii) Materials requisitioned (includes $30,000 of indirect materials) $420,000iv) Assigned manufacturing wages, 85% direct labour, 15% indirect labourv) Depreciation expense on factory equipment used on the different jobs $95,000vi) Other manufacturing overhead incurred $35,000vii) Allocated manufacturing overhead for June 2024viii) Cost of jobs completed $1,015,000ix) Cost of jobs sold (on account) at a margin of 331⁄3% on sales $985,000Required:(a) Compute Carib’s predetermined manufacturing overhead rate for 2024. (b) State the journal entries necessary to record the above transactions in the general journal. Assumethat Carib uses the perpetual inventory system. (c) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account and statethe balance on the account before performing end of period closing entries. Show the journalentries necessary to dispose of the variance. (d) What is the balance in the Cost of Goods Sold account after the adjustment? (e) Compute Carib’s gross profit earned on the jobs completed and sold, after adjusting for themanufacturing overhead variance. (f) Post the appropriate entries to Work in Process Inventory Control account & determine the accountbalance on June 30, the end of the month. (g) State and explain three (3) differences between a job costing system and a process costingsystem.
Carib Tings & More does hand-crafted memorabilia for the tourism industry, in which each batch of
items is a job. The company has a highly machine intensive production process, so it allocates
manufacturing overhead based on machine hours. Carib Tings & More pre-determined overhead
application rate for 2024 was computed from the following data:
Total estimated factory
Total estimated machine hours
$2,400,000
40,000
At the end of May 2024, Carib Tings & More reported work in process inventory of $176,000.
During June 2024, Carib Tings & More actually used 3,000 machine hours and recorded the
following transactions.
i) Purchased $324,000 worth of materials on account. Separately, Carib Tings &
More paid a $2,500 bill for freight in.
ii) Manufacturing wages incurred $400,000
iii) Materials requisitioned (includes $30,000 of indirect materials) $420,000
iv) Assigned manufacturing wages, 85% direct labour, 15% indirect labour
v)
vi) Other manufacturing overhead incurred $35,000
vii) Allocated manufacturing overhead for June 2024
viii) Cost of jobs completed $1,015,000
ix) Cost of jobs sold (on account) at a margin of 331⁄3% on sales $985,000
Required:
(a) Compute Carib’s predetermined manufacturing overhead rate for 2024.
(b) State the
that Carib uses the perpetual inventory system.
(c) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account and state
the balance on the account before performing end of period closing entries. Show the journal
entries necessary to dispose of the variance.
(d) What is the balance in the Cost of Goods Sold account after the adjustment?
(e) Compute Carib’s gross profit earned on the jobs completed and sold, after adjusting for the
manufacturing overhead variance.
(f)
balance on June 30, the end of the month.
(g) State and explain three (3) differences between a
system.
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