Cheyenne, a coffee-mug producer, generally conducts over half of its business in the last month of the calendar year due to holiday sales. By the end of December, its fiscal year-end, Cheyenne had accumulated Cost of Goods Sold in the amount of $263,000. Cheyenne's business model is to maintain minimal WIP Inventory and FG Inventory, so these two accounts had balances of just $28,000 and $32,000, respectively, on December 31. Cheyenne does hold a fair amount of RM Inventory, however, so it will be able to quickly fulfill its orders. As a result, its December 31 RM Inventory (all direct materials) is $98,000. Cheyenne utilizes a normal costing system, in its effort to have timely applied MOH information for each custom job, and its budgeted MOH rate is $2.26/direct labor hour. Budgeted MOH at the beginning of the year was $168,000; actual MOH costs incurred by the end of the year were $194,000. Actual direct labor hours used were 79,000.
Cheyenne, a coffee-mug producer, generally conducts over half of its business in the last month of the calendar year due to holiday sales. By the end of December, its fiscal year-end, Cheyenne had accumulated Cost of Goods Sold in the amount of $263,000. Cheyenne's business model is to maintain minimal WIP Inventory and FG Inventory, so these two accounts had balances of just $28,000 and $32,000, respectively, on December 31. Cheyenne does hold a fair amount of RM Inventory, however, so it will be able to quickly fulfill its orders. As a result, its December 31 RM Inventory (all direct materials) is $98,000. Cheyenne utilizes a normal costing system, in its effort to have timely applied MOH information for each custom job, and its budgeted MOH rate is $2.26/direct labor hour. Budgeted MOH at the beginning of the year was $168,000; actual MOH costs incurred by the end of the year were $194,000. Actual direct labor hours used were 79,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cheyenne, a coffee-mug producer, generally conducts over half of its business in the last month of the calendar year
due to holiday sales. By the end of December, its fiscal year-end, Cheyenne had accumulated Cost of Goods Sold in the
amount of $263,000. Cheyenne's business model is to maintain minimal WIP Inventory and FG Inventory, so these two
accounts had balances of just $28,000 and $32,000, respectively, on December 31. Cheyenne does hold a fair amount
of RM Inventory, however, so it will be able to quickly fulfill its orders. As a result, its December 31 RM Inventory (all
direct materials) is $98,000.
Cheyenne utilizes a normal costing system, in its effort to have timely applied MOH information for each custom job,
and its budgeted MOH rate is $2.26/direct labor hour. Budgeted MOH at the beginning of the year was $168,000;
actual MOH costs incurred by the end of the year were $194,000. Actual direct labor hours used were 79,000.
(a)
Transcribed Image Text:(c)
Record the journal entry to close out the MOH difference by prorating it to the appropriate inventory/cost
accounts based on their ending balances. (Credit account titles are automatically indented when the amount
is entered. Do not indent manually. List all debit entries before credit entries. Round proportions to four
decimal places, e.g. 0.5250 and final answers to 2 decimal places, e.g. 5,275.25.)
Account Titles and Explanation
eTextbook and Media
Debit
Credit
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