Discus Costing I The Harriott manufacturing company uses job order costing system. The company uses machine hours to apply overhead cost to jobs. At the beginning of 2020, the company estimated that 31,400 machine hours would be worked and $5,024,000 overhead cost would be incurred during 202o. The following activities took place in the work in process inventory during February: WIP Inventory A/C November 1 Bal. b/f $51,250 Direct Materials Used 256,400 Other transactions incurred:
Discus Costing I The Harriott manufacturing company uses job order costing system. The company uses machine hours to apply overhead cost to jobs. At the beginning of 2020, the company estimated that 31,400 machine hours would be worked and $5,024,000 overhead cost would be incurred during 202o. The following activities took place in the work in process inventory during February: WIP Inventory A/C November 1 Bal. b/f $51,250 Direct Materials Used 256,400 Other transactions incurred:
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 9P: Channel Products Inc. uses the job order cost system of accounting. The following is a list of the...
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Please also take into consideration the following when approaching the question:
- To record materials issued (Direct & Indirect) – Dr. WIP (Direct); Dr. Manufacturing O/H (Indirect); Cr Material Inventory
- Manufacturing Wages/Labour - Note that there are two ways of journalizing this cost
- · First Dr Manufacturing Wages; Cr Wages Payable; Then Dr WIP (Direct), Dr MO (Indirect), Cr Manufacturing Wages
OR
- · Leave out Manufacturing Wages: Dr WIP (Direct), Dr MO (Indirect), Cr Wages Payable
NOTE: Wages Payable may also be referred to as Accrued Wages or Accrued Payroll
- To record Other Manufacturing O/H Costs- Dr Manufacturing O/H; Cr Various A/Cs e.g. Prepaid Insurance,
Accumulated Depreciation , Cash etc. - To record Manufacturing O/H Applied: Dr WIP; Cr Manufacturing O/H
- To record Finished Goods: Dr FG; Cr WIP
- To record Units Sold (Assume Perpetual Inventory System unless told otherwise) this means that there must be two sets of
journal entries: Dr COGS, Cr Inventory and DrAccounts Receivable /Cash, Cr Sales Revenue - Manufacturing O/H Variance is charged to COGS.
- When determining whether MOHs were over or under applied, use a T-account not a statement (see e-tutor presentation)
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