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Scholastic Brass Corporation manufactures brass musical instruments for use by high school students. The company uses a normal costing system, in which manufacturing overhead is applied on the basis of direct-labor hours. The company’s budget for the current year included the following predictions.
During March, the firm worked on the following two production jobs:
Job number T81, consisting of 76 trombones
Job number C40, consisting of 110 cornets
The events of March are described as follows:
- a. One thousand square feet of rolled brass sheet metal were purchased on account for $5,000.
- b. Four hundred pounds of brass tubing were purchased on account for $4,000.
- c. The following requisitions were submitted on March 5:
Requisition number 112: 250 square feet of brass sheet metal at $5 per square foot (for job number T81)
Requisition number 113: 1,000 pounds of brass tubing, at $10 per pound (for job number C40)
Requisition number 114: 10 gallons of valve lubricant, at $10 per gallon
All brass used in production is treated as direct material. Valve lubricant is an indirect material.
- d. An analysis of labor time cards revealed the following labor usage for March.
Direct labor: Job number T81, 800 hours at $20 per hour
Direct labor: Job number C40, 900 hours at $20 per hour
Indirect labor: General factory cleanup, $4,000
Indirect labor: Factory supervisory salaries, $9,000
- e. Depreciation of the factory building and equipment during March amounted to $12,000.
- f. Rent paid in cash for warehouse space used during March was $1,200.
- g. Utility costs incurred during March amounted to $2,100. The invoices for these costs were received, but the bills were not paid in March.
- h. March property taxes on the factory were paid in cash, $2,400.
- i. The insurance cost covering factory operations for the month of March was $3,100. The insurance policy had been prepaid.
- j. The costs of salaries and
fringe benefits for sales and administrative personnel paid in cash during March amounted to $8,000. - k. Depreciation on administrative office equipment and space amounted to $4,000.
- l. Other selling and administrative expenses paid in cash during March amounted to $1,000.
- m. Job number T81 was completed on March 20.
- n. Half of the trombones in job number T81 were sold on account during March for $700 each.
The March 1 balances in selected accounts are as follows:
Required:
- 1. Calculate the company’s predetermined overhead rate for the year.
- 2. Prepare journal entries to record the events of March.
- 3. Set up T-accounts, and
post the journal entries made in requirement (2). - 4. Calculate the over applied or under applied overhead for March. Prepare a
journal entry to close this balance into Cost of Goods Sold. - 5. Prepare a schedule of cost of goods manufactured for March.
- 6. Prepare a schedule of cost of goods sold for March.
- 7. Prepare an income statement for March.
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Chapter 3 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
- Salisbury Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows: At the beginning of March, Salisburys management planned to produce 500,000 bottles. The actual number of bottles produced for March was 525,000 bottles. The actual costs for March of the current year were as follows: a. Prepare the March manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for Salisbury, assuming planned production. b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for March. c. Interpret the budget performance report.arrow_forwardWember Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $550 per month plus $77 per job plus $13 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in September to be 18 jobs and 148 meals, but the actual activity was 14 jobs and 145 meals. The actual cost for catering supplies in September was $3,340. The catering supplies in the planning budget for September would be closest to:arrow_forwardThe next two questions are based on the problem below. Question 1: How much is the cost of goods manufactured during the current month? * Kai Company uses a plantwide rate based on budgeted DL cost to apply its overhead. Budgeted overhead cost for the month amounted to P420,.000 and expected DL cost is P300,000. During the current month, the company worked on 4 jobs: Job 68 Job 69 Job 70 Job 71 Beginning WIP Direct materials used Direct labor cost P34.500 26,000 10,000 Р23,700 13,700 18,500 P15,000 8,350 3,000- PO 11,000 2,900 During the month, Jobs 68 and 69 were completed, but only job 69 was sold. There was no beginning finished goods inventory at the start of the current month. O a. 84,500 O b. 126,500 c. 166,300 O d. 303,360 Touch here to edi-arrow_forward
- Rothchild Company estimates that total factory overhead costs will be $810,000 for the year. Direct labor hours are estimated to be 90,000. For Rothchild Company, (a) determine the predetermined factory overhead rate using direct labor hours as the activity base, (b) determine the amount of factory overhead applied to Jobs 40 and 42 in August using the data on direct labor hours from Practice Exercise 19-2B, and (c) prepare the journalentry to apply factory overhead to both jobs in August according to the predetermined overhead rate.arrow_forwardAcme Consulting uses job order costing to determine the cost of services provided to clients. For a particular year, Acme has budgeted the following amounts: Office rent and utilities $100,000 Support staff $70,000 Advertising $25,000 Supplies $5,000 Direct labor (based on 2.000 hours) $120,000 The firm has completed job 101 for a client. Job 101 involved 25 hours of direct labor. Acme assigns indirect costs based on direct labor hours. What is the cost of job 101? ANSWER $2,500 $4,000 $1,500 $5,000 I DON'T KNOW YETarrow_forwardCrane Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows: Direct labour Manufacturing overhead $1,810,000 As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $111,000, and 1819C, with total direct labour charges of $390,800. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued for 1768B amounted to $229,000, and for 1819C they amounted to $420,200. 905,000 Total charges to the Manufacturing Overhead Control account for the year were $902,500, and direct labour charges made to all jobs amounted to $1,582,600, representing 247,800 direct labour hours. There were no beginning inventories. In addition to…arrow_forward
- Cullumber Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows: Direct labour $1809.000 Manufacturing overhead 904,500 As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $ 113,800, and 1819C. with total direct labour charges of $ 390,200. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued for 1768B amounted to $ 228.000. and for 1819C they amounted to $ 420.900, Total charges to the Manufacturing Overhead Control account for the year were $ 899,000, and direct labour charges made to all jobs amounted to $ 1,577.200, representing 248,100 direct labour hours. There were no beginning inventories. In…arrow_forward"Burlington Clock Works manufacture fines, handcrafts clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $240,000. The firm employs 10 master clockmakers, who constitute the direct-labor force. Each of these employees is expected to work 2,000 hours during the year, which represents each employee’s practical capacity. The following events occurred during October. The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot. Twenty brass counterweights were requisitioned for production. Each weight cost $23. Five gallons of glue were requisitioned for production. The glue cost $20 per gallon. Glue is treated as an indirect material. Depreciation on the clockworks building for October was $8,000. A $400 utility bill was paid in cash. Timecards showed the following usage of labor: Job number G60: 12 grandfather clocks, 1,000 hours of direct labor Job…arrow_forwardHerrod Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $460 per month plus $106 per job plus $26 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in December to be 16 jobs and 126 meals, but the actual activity was 10 jobs and 109 meals. The actual cost for catering supplies in December was $4,850. The spending variance for catering supplies in December would be closest to: Multiple Choice O O O $582 U $582 F $496 U $496 Farrow_forward
- Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $260,000, and budgeted direct labor hours were 26,000. The average wage rate for direct labor is expected to be $20 per hour. During June, Naranjo Company worked on four jobs. Data relating to these four jobs follow: Job 39 Job 40 Job 41 Job 42 Beginning balance $25,900 $33,300 $17,900 $1,400 Materials requisitioned 20,400 21,800 12,000 14,000 Direct labor cost 11,500 18,900 6,650 4,900 Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 125 percent of cost. (Naranjo had originally developed Job 40 to order for a customer; however, that customer was near bankruptcy and the chance of Naranjo being paid was growing dimmer. Naranjo decided to hold Job 40 in inventory while the customer worked out its financial difficulties. Job 40 is the only job in Finished Goods Inventory.) Jobs 41 and 42 remain…arrow_forwardHerrod Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $420 per month plus $102 per job plus $22 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in December to be 12 jobs and 122 meals, but the actual activity was 6 jobs and 105 meals. The actual cost for catering supplies in December was $3,620. The spending variance for catering supplies in December would be closest to: Multiple Cholce 5708 U $708 F $278 U S278 F < Prev 4 of 10 Mc. Graw 10:52 AM 10/5/2021 W 92 F AQI 61 Type here to search DELL Home End Delete PgUp PgDn F11 F12 PrtScr Insert F8 F9 F10 F6 F7 F1 F2 F3 F4 F5 Num Lock Backspacearrow_forwardCavy Company estimates that total factory overhead costs for the following year will be $1,166,400. The company has determined that the basis for applying factory overhead will be machine hours, which are estimated to be 16,200 hours. There are 5,830 machine hours for all of the jobs in the month of April. What amount of factory overhead will be applied to the jobs for April?fill in the blank 1 of 1$arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubExcel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
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