problem #3 Madelon Lee Company's general ledger included the following items related to its manufacturing activities for 2018. The accounts have been adjusted, but have not yet Allocating Costs to Work in Process and Preparation of the Statement of Cost of Goods Manufactured been closed: Raw Materials Inventory Work in Process Inventory Purchases-Raw Materials Direct Labor P 84,600 99,360 311,400 450,000 194,220 109,440 30,060 84,600 Indirect Labor Factory Utilities Repairs and Maintenance-Factory Equipment Rent Expense-Factory Building Property Taxes-Factory Site Factory Insurance Expense Factory Supplies Expense Depreciation Expense-Factory Equipment Amortization of Patents 19,260 16,020 34,920 82,800 13,680 In addition, the ending inventory of raw materials is known to be P91,080. The ending inventory of Work in Process is not known, but it is known that the company makes a single product and 4,500 units of goods were in process on Dec. 31, 2018. Each unit contained an estimated P18 of direct materials and had P7.50 of direct labor cost assigned to it. Required: 1. Calculate the overhead rate based on the relationship between total manufacturing overhead cost and total direct labor cost. Then, determine the cost of the ending Work in Process inventory. 2. Prepare the statement of cost goods manufactured for 2018. 3. Prepare the journal entries to close the manufacturing accounts to manufacturing summary and to close the manufacturing summary account.
problem #3 Madelon Lee Company's general ledger included the following items related to its manufacturing activities for 2018. The accounts have been adjusted, but have not yet Allocating Costs to Work in Process and Preparation of the Statement of Cost of Goods Manufactured been closed: Raw Materials Inventory Work in Process Inventory Purchases-Raw Materials Direct Labor P 84,600 99,360 311,400 450,000 194,220 109,440 30,060 84,600 Indirect Labor Factory Utilities Repairs and Maintenance-Factory Equipment Rent Expense-Factory Building Property Taxes-Factory Site Factory Insurance Expense Factory Supplies Expense Depreciation Expense-Factory Equipment Amortization of Patents 19,260 16,020 34,920 82,800 13,680 In addition, the ending inventory of raw materials is known to be P91,080. The ending inventory of Work in Process is not known, but it is known that the company makes a single product and 4,500 units of goods were in process on Dec. 31, 2018. Each unit contained an estimated P18 of direct materials and had P7.50 of direct labor cost assigned to it. Required: 1. Calculate the overhead rate based on the relationship between total manufacturing overhead cost and total direct labor cost. Then, determine the cost of the ending Work in Process inventory. 2. Prepare the statement of cost goods manufactured for 2018. 3. Prepare the journal entries to close the manufacturing accounts to manufacturing summary and to close the manufacturing summary account.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:problem #3
manufacturing activities for 2018. The accounts have been adjusted, but have not yet
Allocating Costs to Work in Process and Preparation of the Statement of Cost of Goods
Madelon Lee Company's general ledger included the following items related to its
Manufactured
been closed:
Raw Materials Inventory
Work in Process Inventory
Purchases-Raw Materials
P 84,600
99,360
311,400
450,000
Direct Labor
Indirect Labor
194,220
Factory Utilities
Repairs and Maintenance-Factory Equipment
Rent Expense-Factory Building
Property Taxes-Factory Site
Factory Insurance Expense
Factory Supplies Expense
Depreciation Expense-Factory Equipment
109,440
30,060
84,600
19,260
16,020
34,920
82,800
Amortization of Patents
13,680
In addition, the ending inventory of raw materials is known to be P91,080. The ending
inventory of Work in Process is not known, but it is known that the company makes a
single product and 4,500 units of goods were in process on Dec. 31, 2018. Each unit
contained an estimated P18 of direct materials and had P7.50 of direct labor cost
assigned to it.
Required:
1. Calculate the overhead rate based on the relationship between total manufacturing
overhead cost and total direct labor cost. Then, determine the cost of the ending
Work in Process inventory.
2. Prepare the statement of cost goods manufactured for 2018.
3. Prepare the journal entries to close the manufacturing accounts to manufacturing
summary and to close the manufacturing summary account.
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