Kenos Pte Ltd manufactures all types of custom-made furniture. It uses a job-costing system and applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totalled $2,400,000. It has a maximum capacity of 320,000 machine hours. However, it is budgeted to be able to use 75% of this capacity during this period. On 31 July, Kenos Pte Ltd has the following balances: Work in process inventory -Job 123 -Job 124 Raw materials inventory $13,360 Finished inventory -Job 122 $18,000 $8,620 In August, the following occurred: $23,000 (i)Raw materials purchased on credit (ii) Raw materials requisitions -Job number 123 -Job number 124 -Job number 125 -Indirect materials (used in production) (v) (iv)Other overhead incurred: (iii)Machine hours, direct labour hours and wages for factory employees Job number Machine hours Labour hours Wages 123 $24,480 124 $8,640 125 $40,100 Indirect labour $5,880 2,400 880 3,900 Required: - Depreciation (machineries) Depreciation (delivery vans) Salaries (production) - Salaries (sales and administration) Other factory costs Other selling and administration costs Spoilage & reworked costs -job number 123 2,320 720 2,860 600 -job number 124 -job number 125 $4,840 $1,020 $600 $2,480 $600 $4,000 $400 $10,000 $7,000 (1) The overhead variances are not significant. The overhead variances are significant. $15,600 $9,600 Normal spoilage with estimated disposal selling price of $320 was incurred. Rework cost of $52 was incurred. (vi) Job number 123 and Job number 124 were completed during the month. Normal spoilage amounting to $70 and abnormal spoilage of $30 were incurred (vii) Job number 122 was sold for cash at a mark-up of 30% on cost while Job number 123 was sold on credit at a price that allowed the company to earn a gross profit margin of 20%. Provide the necessary journal entries to close off the balance in the overhead control account assuming:
Kenos Pte Ltd manufactures all types of custom-made furniture. It uses a job-costing system and applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totalled $2,400,000. It has a maximum capacity of 320,000 machine hours. However, it is budgeted to be able to use 75% of this capacity during this period. On 31 July, Kenos Pte Ltd has the following balances: Work in process inventory -Job 123 -Job 124 Raw materials inventory $13,360 Finished inventory -Job 122 $18,000 $8,620 In August, the following occurred: $23,000 (i)Raw materials purchased on credit (ii) Raw materials requisitions -Job number 123 -Job number 124 -Job number 125 -Indirect materials (used in production) (v) (iv)Other overhead incurred: (iii)Machine hours, direct labour hours and wages for factory employees Job number Machine hours Labour hours Wages 123 $24,480 124 $8,640 125 $40,100 Indirect labour $5,880 2,400 880 3,900 Required: - Depreciation (machineries) Depreciation (delivery vans) Salaries (production) - Salaries (sales and administration) Other factory costs Other selling and administration costs Spoilage & reworked costs -job number 123 2,320 720 2,860 600 -job number 124 -job number 125 $4,840 $1,020 $600 $2,480 $600 $4,000 $400 $10,000 $7,000 (1) The overhead variances are not significant. The overhead variances are significant. $15,600 $9,600 Normal spoilage with estimated disposal selling price of $320 was incurred. Rework cost of $52 was incurred. (vi) Job number 123 and Job number 124 were completed during the month. Normal spoilage amounting to $70 and abnormal spoilage of $30 were incurred (vii) Job number 122 was sold for cash at a mark-up of 30% on cost while Job number 123 was sold on credit at a price that allowed the company to earn a gross profit margin of 20%. Provide the necessary journal entries to close off the balance in the overhead control account assuming:
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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Transcribed Image Text:Kenos Pte Ltd manufactures all types of custom-made furniture. It uses a job-costing system and
applies manufacturing overhead on the basis of machine hours. The company's manufacturing
overhead budget for the year totalled $2,400,000. It has a maximum capacity of 320,000 machine
hours. However, it is budgeted to be able to use 75% of this capacity during this period.
On 31 July, Kenos Pte Ltd has the following balances:
Work in process inventory
-Job 123
-Job 124
Raw materials inventory $13,360
Finished inventory
-Job 122
In August, the following occurred:
$18,000
$8,620
(i)Raw materials purchased on credit
(ii) Raw materials requisitions
$23,000
(v)
(vi)
Job number
123
124
125
Indirect labour
-Job number 123
-Job number 124
-Job number 125
-Indirect materials (used in production)
(iii)Machine hours, direct labour hours and wages for factory employees
(iv)Other overhead incurred:
Required:
(0)
(ii)
Depreciation (machineries)
Depreciation (delivery vans)
Machine hours Labour hours
2,400
2,320
880
720
3,900
2,860
600
Salaries (production)
Salaries (sales and administration)
Other factory costs
Other selling and administration costs
Spoilage & reworked costs
-job number 123
-job number 124
$4,840
-job number 125
$1,020
$600
$2,480
$600
Wages
$24,480
$8,640
$40,100
$5,880
$4,000
$400
The overhead variances are not significant.
The overhead variances are significant.
$10,000
$7,000
$15,600
$9,600
Normal spoilage with estimated disposal selling price of
$320 was incurred.
Normal spoilage amounting to $70 and abnormal spoilage
of $30 were incurred
Rework cost of $52 was incurred.
Job number 123 and Job number 124 were completed during the month.
(vii) Job number 122 was sold for cash at a mark-up of 30% on cost while Job number 123
was sold on credit at a price that allowed the company to earn a gross profit margin of
20%.
Provide the necessary journal entries to close off the balance in the overhead control
account assuming:
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