Job 1 Job 2 Job 3 Total Direct Labor $4,200 2,800 9,000 $ 16,000 Direct Materials $ 4,800 1,600 3,700 $ 10,100 Rooney's predetermined manufacturing overhead rate was $0.40 per direct labor dollar. Actual manufacturing overhead costs amounted to $6,152. Rooney paid cash for all costs. The company completed and delivered Jobs 1 and 2 to customers during the year. Job 3 was incomplete at the end of the year. The company sold Job 1 for $17,000 cash and Job 2 for $7,900 cash. Rooney also paid $3,400 cash for selling and administrative expenses for the year. Rooney uses a just-in-time inventory management system. Consequently, it does not have raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account. Required a. Record the preceding events in a horizontal statements model. The first row shows beginning balances. b. Record the entry to close the amount of underapplied or overapplied overhead for the year to Cost of Goods Sold (in the expense category) in the horizontal financial statements model. c. Determine the gross margin for the year.
Job 1 Job 2 Job 3 Total Direct Labor $4,200 2,800 9,000 $ 16,000 Direct Materials $ 4,800 1,600 3,700 $ 10,100 Rooney's predetermined manufacturing overhead rate was $0.40 per direct labor dollar. Actual manufacturing overhead costs amounted to $6,152. Rooney paid cash for all costs. The company completed and delivered Jobs 1 and 2 to customers during the year. Job 3 was incomplete at the end of the year. The company sold Job 1 for $17,000 cash and Job 2 for $7,900 cash. Rooney also paid $3,400 cash for selling and administrative expenses for the year. Rooney uses a just-in-time inventory management system. Consequently, it does not have raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account. Required a. Record the preceding events in a horizontal statements model. The first row shows beginning balances. b. Record the entry to close the amount of underapplied or overapplied overhead for the year to Cost of Goods Sold (in the expense category) in the horizontal financial statements model. c. Determine the gross margin for the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Job 1
Job 2
Job 3
Total
Direct Labor
$4,200
2,800
9,000
$ 16,000
Direct Materials
$ 4,800
1,600
3,700
$ 10,100
Rooney's predetermined manufacturing overhead rate was $0.40 per direct labor dollar. Actual manufacturing overhead costs
amounted to $6,152. Rooney paid cash for all costs. The company completed and delivered Jobs 1 and 2 to customers during the year.
Job 3 was incomplete at the end of the year. The company sold Job 1 for $17,000 cash and Job 2 for $7,900 cash. Rooney also paid
$3,400 cash for selling and administrative expenses for the year.
Rooney uses a just-in-time inventory management system. Consequently, it does not have raw materials inventory. Raw materials
purchases are recorded directly in the Work in Process Inventory account.
Required
a. Record the preceding events in a horizontal statements model. The first row shows beginning balances.
b. Record the entry to close the amount of underapplied or overapplied overhead for the year to Cost of Goods Sold (in the expense
category) in the horizontal financial statements model.
c. Determine the gross margin for the year.
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