Chapter 17: 17-1SE-j (page 938)
Distinguishing between job order costing and process costing
Would the following companies most likely use job order costing or process costing?
j. A manufacturer of tennis shoes
A manufacturer of tennis shoes is most likely to use process costing system.
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Justice Company’s Manufacturing Overhead account is given below. Use this informationto prepare the journal entry to adjust for overallocated or underallocatedoverhead.
Manufacturing overhead
| 148000 | 147000 |
Question: Analyze the following T-accounts, and describe each lettered transaction. Note that some transactions may be compound entries.
Raw material inventory
(a) | (b) |
Work in process inventory
(b) | (f) |
(c ) | |
(e ) |
Finished goods inventory
(f) | (g) |
Prepaid insurance
(d) |
Account payable
(a) |
Wages payable
(c) |
Manufacturing overhead
(b) | (e) |
(c ) | (h) |
(d) |
Cost of goods sold
(g) | |
(h) |
Question: Journalize the following transactions for Marge’s Sofas. Explanations are not required.
c. Purchased raw materials on account, $24,000.
Comparing actual to allocated overhead
Columbus Enterprises reports the following information at December 31, 2018:
Manufacturing overhead
3,500 | 50,600 |
19,000 | |
34,500 |
Requirements
2. What is the allocated manufacturing overhead?
Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:
Manufacturing overhead costs | \(840,000 |
Direct labor cost | 1,480,000 |
Machine hours | 70,000 hours |
At the end of 2018, the company had actually incurred:
Direct labor cost | \)1,230,000 |
Depreciation on manufacturing plant and equipment | 620,000 |
Property taxes on plant | 35,500 |
Sales salaries | 26,000 |
Delivery driver’s wages | 22,500 |
Plant janitor’s wages | 17,000 |
Machine hours | 60,000 hours |
Requirements
4. Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead. Does your entry increase or decrease Cost of Goods Sold?
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