Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company’s production activities during May 2017 follows. Purchased raw materials on credit, $260,000.
Materials requisitions record use of the following materials for the month.
Job 136 $ 49,500
Job 137 33,000
Job 138 20,200
Job 139 22,400
Job 140 7,000
Total direct materials 132,100
Indirect materials 20,000
Total materials used $ 152,100
Paid $15,250 cash to a computer consultant to reprogram factory equipment. Time tickets record use of the following labor for the month.
These wages were paid in cash.
Job 136 $ 12,200
Job 137 10,500
Job 138 37,900
Job 139 39,200
Job 140 3,600
Total direct labor 103,400
Indirect labor 26,500
Total $ 129,900
Applied overhead to Jobs 136, 138, and 139.
Transferred Jobs 136, 138, and 139 to Finished Goods.
Sold Jobs 136 and 138 on credit at a total price of $535,000.
The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).
Depreciation of factory building $ 68,000
Depreciation of factory equipment 37,500
Expired factory insurance 12,000
Accrued property taxes payable 37,000
Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
Required:
1. Prepare a job cost sheet for each job worked on during the month.
2. Prepare journal entries to record the events and transactions a through i.
3. Post the journal entries for the transactions to the following T-accounts, each of which started the month with a zero balance.
4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Work in Process Inventory account balance.
5. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.