Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,252,500 in manufacturing overhead cost at an activity level of 567,000 machine-hours. The company spent the entire month of January working on a large order for 12,800 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, $325,000. b. Raw materials used in production, $265,000 (80% direct materials and 20% indirect materials). c. Labor cost accrued in the factory, $156,000 (one-third direct labor and two-thirds indirect labor). 4 d. Depreciation recorded on factory equipment, $63,500. e. Other manufacturing overhead costs incurred on account, $85,700. f. Manufacturing overhead cost was applied to production on the basis of 40,560 machine-hours actually worked during the month g. The completed job for 12,800 custom-made machined parts was moved into the finished goods warehouse on January 31 to await 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 (1) above [ignore item (g) for the moment] 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T- accounts. 3. Prepare a journal entry for item (g) above.
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,252,500 in manufacturing overhead cost at an activity level of 567,000 machine-hours. The company spent the entire month of January working on a large order for 12,800 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, $325,000. b. Raw materials used in production, $265,000 (80% direct materials and 20% indirect materials). c. Labor cost accrued in the factory, $156,000 (one-third direct labor and two-thirds indirect labor). 4 d. Depreciation recorded on factory equipment, $63,500. e. Other manufacturing overhead costs incurred on account, $85,700. f. Manufacturing overhead cost was applied to production on the basis of 40,560 machine-hours actually worked during the month g. The completed job for 12,800 custom-made machined parts was moved into the finished goods warehouse on January 31 to await 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 (1) above [ignore item (g) for the moment] 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T- accounts. 3. Prepare a journal entry for item (g) above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
![Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and
applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to
estimate that it would incur $4,252,500 in manufacturing overhead cost at an activity level of 567,000 machine-hours.
The company spent the entire month of January working on a large order for 12,800 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, $325,000.
b. Raw materials used in production, $265,000 (80% direct materials and 20% indirect materials).
c. Labor cost accrued in the factory, $156,000 (one-third direct labor and two-thirds indirect labor).
d. Depreciation recorded on factory equipment, $63,500.
e. Other manufacturing overhead costs incurred on account, $85,700.
f. Manufacturing overhead cost was applied to production on the basis of 40,560 machine-hours actually worked during the month
g. The completed job for 12,800 custom-made machined parts was moved into the finished goods warehouse on January 31 to await
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 (1) above [ignore item (g) for the moment]
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T-
accounts.
3. Prepare a journal entry for item (g) above.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F503bef97-0a89-4e34-8b8c-b76f4dabcdee%2Fc6ec4ba9-eb86-4628-ad4c-4074a7a276b4%2Fs2ikbo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and
applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to
estimate that it would incur $4,252,500 in manufacturing overhead cost at an activity level of 567,000 machine-hours.
The company spent the entire month of January working on a large order for 12,800 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, $325,000.
b. Raw materials used in production, $265,000 (80% direct materials and 20% indirect materials).
c. Labor cost accrued in the factory, $156,000 (one-third direct labor and two-thirds indirect labor).
d. Depreciation recorded on factory equipment, $63,500.
e. Other manufacturing overhead costs incurred on account, $85,700.
f. Manufacturing overhead cost was applied to production on the basis of 40,560 machine-hours actually worked during the month
g. The completed job for 12,800 custom-made machined parts was moved into the finished goods warehouse on January 31 to await
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 (1) above [ignore item (g) for the moment]
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T-
accounts.
3. Prepare a journal entry for item (g) above.
![Prepare journal entries to record items (a) through (f) above [ignore item (g) for the moment]. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)
View transaction list View journal entry worksheet
Transaction
No
General Journal
Raw materials
Work in process
Raw materials
Wages and salaries payable
Accounts payable
Manufacturing overhead
No Transaction Recorded
< Required 1
Required 2 >
Debit
325,000
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F503bef97-0a89-4e34-8b8c-b76f4dabcdee%2Fc6ec4ba9-eb86-4628-ad4c-4074a7a276b4%2F8fvwino_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Prepare journal entries to record items (a) through (f) above [ignore item (g) for the moment]. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)
View transaction list View journal entry worksheet
Transaction
No
General Journal
Raw materials
Work in process
Raw materials
Wages and salaries payable
Accounts payable
Manufacturing overhead
No Transaction Recorded
< Required 1
Required 2 >
Debit
325,000
Credit
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