Krazy Kayaks manufactures kayaks. The company has automated production, so it allocates manufacturing overhead based on machine hours. Krazy expects to incur $240,000 of manufacturing overhead costs and to use 4,000 machine hours during 2015. At the end of 2014, Krazy reported the following inventories: Raw Materials Inventory $20,000 Work-in-Process Inventory $17,000 Finished Goods Inventory $11,000 During January 2015, Krazy used 300 machine hours and recorded the following transactions: Purchased materials on account, $31,000 Used direct materials, $39,000 Manufacturing wages incurred totaled $40,000, of which 90% was direct labor and 10% was indirect labor. Used indirect materials, $3,000 Incurred other manufacturing overhead for January 2015, $13,000 Allocated manufacturing overhead for January 2015 Cost of completed motor scooters, $100,000 Sold scooters on account, $175,000; cost of scooters sold, $95,000 Requirements: Compute Krazy Kayak’s predetermined overhead allocation rate for 2015 Journalize the transactions in the general journal. Adjust the Manufacturing overhead for the overallocated or under-allocated overhead.

Name: Krazy Kayaks manufactures kayaks. The company has automated production
Uploaded: 2024-03-20T06:32:49.000Z
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Description: Krazy Kayaks manufactures kayaks. The company has automated production, so it allocates manufacturing overhead based on machine hours. Krazy expects to incur $240,000 of manufacturing overhead costs and to use 4,000 machine hours during 2015. At the

Journal entries are prepared to record the financial and non financial transactions of the business…

Answered: Krazy Kayaks manufactures kayaks. The company has automated production, so it allocates manufacturing overhead based on machine hours. Krazy expects to incur…

FINANCIAL ACCOUNTING

10th Edition

ISBN: 9781259964947

Author: Libby

Publisher: MCG

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Question

Krazy Kayaks manufactures kayaks. The company has automated production, so it allocates manufacturing overhead based on machine hours. Krazy expects to incur $240,000 of manufacturing overhead costs and to use 4,000 machine hours during 2015. At the end of 2014, Krazy reported the following inventories:

Raw Materials Inventory $20,000

Work-in-Process Inventory $17,000

Finished Goods Inventory $11,000

During January 2015, Krazy used 300 machine hours and recorded the following transactions:

Purchased materials on account, $31,000
Used direct materials, $39,000
Manufacturing wages incurred totaled $40,000, of which 90% was direct labor and 10% was indirect labor.
Used indirect materials, $3,000
Incurred other manufacturing overhead for January 2015, $13,000
Allocated manufacturing overhead for January 2015
Cost of completed motor scooters, $100,000
Sold scooters on account, $175,000; cost of scooters sold, $95,000

Requirements:

Compute Krazy Kayak’s predetermined overhead allocation rate for 2015

Journalize the transactions in the general journal.

Adjust the Manufacturing overhead for the overallocated or under-allocated overhead.

Expert Solution