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PART 1 (25 marks) Aubergine is a manufacturer of contemporary cases for tablets. The business uses a perpetual inventory system and has a highly labour-intensive production process, so it applies manufacturing overhead based on direct labour hours. Any overhead variance is deemed to be immaterial and therefore closed out to Cost of Goods Sold. Aubergine's pre-determined overhead application rate for 2024 was computed from the following data: Total estimated factory overheads Total estimated direct labour hours $4,200,000 35,000 During the first month of 2024, the business recorded the following transactions. Purchased $500,000 worth of materials on account. Separately, Aubergine paid a $3,540 bill for freight in. ii) Incurred manufacturing wages of $1,065,000 iii) Issued direct materials and used direct labour in manufacturing Job # Direct Materials Direct Labour Direct Labour Hours A-141 A-142 A-143 A-144 $100,000 81,000 90,000 150,000 $220,000 190,000 205,000 290,250 1,200 1,000 1,100 1,800 iv) Issued indirect materials to production, $80,000 v) Charged indirect manufacturing wages to production, $159,750 vi) Depreciation expense on factory equipment used on the different jobs, $300,000 vii) Other overhead costs incurred on jobs A-141 to A-144 amounted to $112,750 viii) Applied factory overhead to the various jobs using the pre-determined factory overhead rate. ix) Finished Jobs A-141 - A-143 and transferred to the finished goods inventory account ✗) Shipped Job A-141 and A-142 and billed customers at a margin of 25% on cost. Required: a) Compute Aubergine's predetermined manufacturing overhead rate. b) Calculate the total manufacturing cost for each job. (1 mark) (3 marks) c) Using the total figures, record the above transactions in the general journal. (9 marks)

PART 1 (25 marks) Aubergine is a manufacturer of contemporary cases for tablets. The business uses a perpetual inventory system and has a highly labour-intensive production process, so it applies manufacturing overhead based on direct labour hours. Any overhead variance is deemed to be immaterial and therefore closed out to Cost of Goods Sold. Aubergine's pre-determined overhead application rate for 2024 was computed from the following data: Total estimated factory overheads Total estimated direct labour hours $4,200,000 35,000 During the first month of 2024, the business recorded the following transactions. Purchased $500,000 worth of materials on account. Separately, Aubergine paid a $3,540 bill for freight in. ii) Incurred manufacturing wages of $1,065,000 iii) Issued direct materials and used direct labour in manufacturing Job # Direct Materials Direct Labour Direct Labour Hours A-141 A-142 A-143 A-144 $100,000 81,000 90,000 150,000 $220,000 190,000 205,000 290,250 1,200 1,000 1,100 1,800 iv) Issued indirect materials to production, $80,000 v) Charged indirect manufacturing wages to production, $159,750 vi) Depreciation expense on factory equipment used on the different jobs, $300,000 vii) Other overhead costs incurred on jobs A-141 to A-144 amounted to $112,750 viii) Applied factory overhead to the various jobs using the pre-determined factory overhead rate. ix) Finished Jobs A-141 - A-143 and transferred to the finished goods inventory account ✗) Shipped Job A-141 and A-142 and billed customers at a margin of 25% on cost. Required: a) Compute Aubergine's predetermined manufacturing overhead rate. b) Calculate the total manufacturing cost for each job. (1 mark) (3 marks) c) Using the total figures, record the above transactions in the general journal. (9 marks)

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 10E: SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that...
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PART 1 (25 marks) Aubergine is a manufacturer of contemporary cases for tablets. The business uses a perpetual inventory system and has a highly labour-intensive production process, so it applies manufacturing overhead based on direct labour hours. Any overhead variance is deemed to be immaterial and therefore closed out to Cost of Goods Sold. Aubergine's pre-determined overhead application rate for 2024 was computed from the following data: Total estimated factory overheads Total estimated direct labour hours $4,200,000 35,000 During the first month of 2024, the business recorded the following transactions. Purchased $500,000 worth of materials on account. Separately, Aubergine paid a $3,540 bill for freight in. ii) Incurred manufacturing wages of $1,065,000 iii) Issued direct materials and used direct labour in manufacturing Job # Direct Materials Direct Labour Direct Labour Hours A-141 A-142 A-143 A-144 $100,000 81,000 90,000 150,000 $220,000 190,000 205,000 290,250 1,200 1,000 1,100 1,800 iv) Issued indirect materials to production, $80,000 v) Charged indirect manufacturing wages to production, $159,750 vi) Depreciation expense on factory equipment used on the different jobs, $300,000 vii) Other overhead costs incurred on jobs A-141 to A-144 amounted to $112,750 viii) Applied factory overhead to the various jobs using the pre-determined factory overhead rate. ix) Finished Jobs A-141 - A-143 and transferred to the finished goods inventory account ✗) Shipped Job A-141 and A-142 and billed customers at a margin of 25% on cost. Required: a) Compute Aubergine's predetermined manufacturing overhead rate. b) Calculate the total manufacturing cost for each job. (1 mark) (3 marks) c) Using the total figures, record the above transactions in the general journal. (9 marks)
Transcribed Image Text:PART 1 (25 marks) Aubergine is a manufacturer of contemporary cases for tablets. The business uses a perpetual inventory system and has a highly labour-intensive production process, so it applies manufacturing overhead based on direct labour hours. Any overhead variance is deemed to be immaterial and therefore closed out to Cost of Goods Sold. Aubergine's pre-determined overhead application rate for 2024 was computed from the following data: Total estimated factory overheads Total estimated direct labour hours $4,200,000 35,000 During the first month of 2024, the business recorded the following transactions. Purchased $500,000 worth of materials on account. Separately, Aubergine paid a $3,540 bill for freight in. ii) Incurred manufacturing wages of $1,065,000 iii) Issued direct materials and used direct labour in manufacturing Job # Direct Materials Direct Labour Direct Labour Hours A-141 A-142 A-143 A-144 $100,000 81,000 90,000 150,000 $220,000 190,000 205,000 290,250 1,200 1,000 1,100 1,800 iv) Issued indirect materials to production, $80,000 v) Charged indirect manufacturing wages to production, $159,750 vi) Depreciation expense on factory equipment used on the different jobs, $300,000 vii) Other overhead costs incurred on jobs A-141 to A-144 amounted to $112,750 viii) Applied factory overhead to the various jobs using the pre-determined factory overhead rate. ix) Finished Jobs A-141 - A-143 and transferred to the finished goods inventory account ✗) Shipped Job A-141 and A-142 and billed customers at a margin of 25% on cost. Required: a) Compute Aubergine's predetermined manufacturing overhead rate. b) Calculate the total manufacturing cost for each job. (1 mark) (3 marks) c) Using the total figures, record the above transactions in the general journal. (9 marks)
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