fundamental accounting principles 20th edition 416491
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Westin Watercraft’s predetermined overhead rate for year 2011 is 200% of direct labor. Information on the company’s production activities during May 2011 follows. |
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| a. | Purchased raw materials on credit, $125,000. |
| b. | Paid $84,000 cash for factory wages. |
| c. | Paid $11,000 cash to a computer consultant to reprogram factory equipment. |
| d. | Materials requisitions record use of the following materials for the month. |
| Job 136 | $ | 30,000 | |
| Job 137 | 20,000 | ||
| Job 138 | 12,000 | ||
| Job 139 | 14,000 | ||
| Job 140 | 4,000 | ||
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| Total direct materials | 80,000 | ||
| Indirect materials | 12,000 | ||
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| Total materials used | $ | 92,000 | |
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| e. | Time tickets record use of the following labor for the month. |
| Job 136 | $ | 8,000 | |
| Job 137 | 7,000 | ||
| Job 138 | 25,000 | ||
| Job 139 | 26,000 | ||
| Job 140 | 2,000 | ||
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| Total direct labor | 68,000 | ||
| Indirect labor | 16,000 | ||
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| Total | $ | 84,000 | |
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| f. | Applied overhead to Jobs 136, 138, and 139. |
| g. | Transferred Jobs 136, 138, and 139 to Finished Goods. |
| h. | Sold Jobs 136 and 138 on credit at a total price of $340,000. |
| i. |
The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). |
| Depreciation of factory building | $ | 37,000 | |
| Depreciation of factory equipment | 21,000 | ||
| Expired factory insurance | 7,000 | ||
| Accrued property taxes payable | 31,000 | ||
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| j. |
Applied overhead at month end to the Goods in Process (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost. |
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