Manor Painting is a commercial interior and exterior painting contractor specializing in commercial buildings. An inventory of materials and equipment is on hand at all times, so work can start as quickly as possible. Special equipment is ordered as required. On August 1, the Materials Inventory account had a balance of $55,300. The Work-in-Process Inventory account is maintained to record costs of work not yet complete. There were two such jobs on August 1 with the following costs: Job 84 $ 24,400 21,600 8,640 Materials and equipment Direct labor Overhead (applied) Overhead has been applied at 40 percent of the costs of direct labor using an annual rate. During August, Manor Painting started two new jobs. Additional work was carried out on Jobs 84 and 87. Job 87 was completed and billed to the customer. Details on the costs incurred on jobs during August follow: Job 87 $ 80, 100 40,700 16,280 Property taxes Storage area rental Truck and delivery cost Advertising and promotion campaign Inspections Telephone and other miscellaneous Equipment depreciation Job 84 Job 87 $5,800 $ 8,500 9,100 11,400 10, 200 Job 88 $8,200 Materials and equipment Direct labor (wages payable) Other August Events 1. Purchased materials and equipment for $15,400. 2. Billed $196,300 to the customer for Job 87 and received payment for $116,300 of that amount. 3. Received $19,900 payment on Job 82 delivered to customer in July. 4. Determined that payroll for indirect labor personnel totaled $2,360. 5. Issued supplies and incidental materials for current jobs costing $880. 6. Recorded overhead and advertising costs for the operation as follows (all cash except equipment depreciation): $ 1,030 1,180 1,760 Job 90 $ 5,700 3,700 1,330 1,030 810 2,850
Manor Painting is a commercial interior and exterior painting contractor specializing in commercial buildings. An inventory of materials and equipment is on hand at all times, so work can start as quickly as possible. Special equipment is ordered as required. On August 1, the Materials Inventory account had a balance of $55,300. The Work-in-Process Inventory account is maintained to record costs of work not yet complete. There were two such jobs on August 1 with the following costs: Job 84 $ 24,400 21,600 8,640 Materials and equipment Direct labor Overhead (applied) Overhead has been applied at 40 percent of the costs of direct labor using an annual rate. During August, Manor Painting started two new jobs. Additional work was carried out on Jobs 84 and 87. Job 87 was completed and billed to the customer. Details on the costs incurred on jobs during August follow: Job 87 $ 80, 100 40,700 16,280 Property taxes Storage area rental Truck and delivery cost Advertising and promotion campaign Inspections Telephone and other miscellaneous Equipment depreciation Job 84 Job 87 $5,800 $ 8,500 9,100 11,400 10, 200 Job 88 $8,200 Materials and equipment Direct labor (wages payable) Other August Events 1. Purchased materials and equipment for $15,400. 2. Billed $196,300 to the customer for Job 87 and received payment for $116,300 of that amount. 3. Received $19,900 payment on Job 82 delivered to customer in July. 4. Determined that payroll for indirect labor personnel totaled $2,360. 5. Issued supplies and incidental materials for current jobs costing $880. 6. Recorded overhead and advertising costs for the operation as follows (all cash except equipment depreciation): $ 1,030 1,180 1,760 Job 90 $ 5,700 3,700 1,330 1,030 810 2,850
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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.
Topic Video
Question
Transcribed Image Text:Manor Painting is a commercial interior and exterior painting contractor specializing in commercial buildings. An inventory of materials and equipment is kept on hand at all times, allowing work to start as quickly as possible. Special equipment is ordered as required. On August 1, the Materials Inventory account had a balance of $55,300. The Work-in-Process Inventory account is maintained to record costs of work not yet complete. There were two such jobs on August 1 with the following costs:
| | Job 84 | Job 87 |
|----------|---------|---------|
| Materials and equipment | $24,400 | $80,100 |
| Direct labor | $21,600 | $40,700 |
| Overhead (applied) | $8,640 | $16,280 |
Overhead has been applied at 40 percent of the costs of direct labor using an annual rate.
During August, Manor Painting started two new jobs. Additional work was carried out on Jobs 84 and 87. Job 87 was completed and billed to the customer. Details on the costs incurred on jobs during August follow:
| | Job 84 | Job 87 | Job 88 | Job 90 |
|----------|---------|---------|---------|---------|
| Materials and equipment | $5,800 | $8,500 | $8,200 | $5,700 |
| Direct labor (wages payable) | $9,100 | $11,400 | $10,200 | $3,700 |
**Other August Events**
1. Purchased materials and equipment for $15,400.
2. Billed $196,300 to the customer for Job 87 and received payment for $116,300 of that amount.
3. Received $19,900 payment on Job 82 delivered to customer in July.
4. Determined that payroll for indirect labor personnel totaled $2,360.
5. Issued supplies and incidental materials for current jobs costing $880.
6. Recorded overhead and advertising costs for the operation as follows (all cash except equipment depreciation):
- Property taxes: $1,030
- Storage area rental: $1,180
- Truck and delivery cost: $1,760
- Advertising and promotion campaign: $1,330
- Inspections: $1,030
- Telephone and other miscellaneous: $810
- Equipment depreciation: $2
Transcribed Image Text:**Instructions for Cost Accounting Procedures**
a. **Prepare Journal Entries**
Record the flow of costs for operations during the month of August. This involves documenting all financial transactions related to production costs to ensure accurate accounting and reporting.
b. **Calculate Over- or Underapplied Overhead**
Determine the amount of overapplied or underapplied overhead for the month. This figure represents the difference between estimated and actual overhead costs and is adjusted by making a debit or credit entry to the Cost of Goods Sold account.
c. **Determine Inventory Balances**
Assess the inventory balances for two categories: Materials and Equipment Inventory and Work-in-Process Inventory. This step ensures that the inventory levels are accurately reflected in financial records, which is crucial for evaluating production efficiency and cost management.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 11 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education