2) Allenton Company is a manufacturing firm that uses job-order costing. At the beginning of the...

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2) Allenton Company is a manufacturing firm that uses job-ordercosting. At the beginning of the year, the company's inventorybalances were as follows:
Raw materials: $26,000
Work in process $47,000
Finished goods $133,000

The company applies overhead to jobs using a predetermined overheadrate based on machine-hours. At the beginning of the year, thecompany estimated that it would work 31,000 machine-hours and incur$248,000 in manufacturing overhead cost. The following transactionswere recorded for the year:

a. Raw materials were purchased, $421,000.
b. Raw materials were requisitioned for use in production, $408,000($387,000 direct and $21,000 indirect).
c. The following employee costs were incurred: direct labor,$145,000; indirect labor, $61,000; and administrative salaries,$190,000.
d. Selling costs, $138,000.
e. Factory utility costs, $14,000.
f. Depreciation for the year was $121,000 of which $114,000 isrelated to factory operations and $7,000 is related to selling,general, and administrative activities.
g. Manufacturing overhead was applied to jobs. The actual level ofactivity for the year was 29,000 machine-hours.
h. The cost of goods manufactured for the year was $783,000.
i. Sales for the year totaled $1,107,000 and the costs on the jobcost sheets of the goods that were sold totaled $768,000.
j. The balance in the Manufacturing Overhead account was closed outto Cost of Goods Sold.

Required:
Complete the following T-accounts (or journal entries) byrecording the beginning balances and each of the transactionslisted above. Assume all transactions are conducted with cash.

Answer & Explanation Solved by verified expert

3.7 Ratings (299 Votes)

1	a.	Raw Materials	421,000
		Cash		421,000

	b.	Work in Process	387,000
		Manufacturing Overhead	21,000
		Raw Materials		408,000

	c.	Work in Process	145,000
		Manufacturing Overhead	61,000
		Salaries Expense	190,000
		Cash		396,000

	d.	Selling expense	138,000
		Cash		138,000

	e.	Manufacturing Overhead	14,000
		Cash		14,000

	f.	Manufacturing Overhead	114,000
		Depreciation Expense	7,000
		Accumulated Depreciation		121,000

	g.	Work in Process	232,000
		Manufacturing Overhead		232,000

	Predetermined Overhead Cost = Estimated total manufacturing overhead cost/Estimated total amount of the allocation base


		248000 / 31000 = $8 per Mh

		29000 actual MH × $ 8 per MH = $ 232,000.

	h.	Finished Goods	783,000
		Work in Process		783,000

	i.	Cash	1,107,000
		Sales		1,107,000

		Cost of Goods Sold	768,000
		Finished Goods		768,000

	j.	Manufacturing Overhead	22,000
		Cost of Goods Sold		22,000

		Overapplied overhead:
		210,000 incurred – 232,000 applied = 22,000 overapplied

Note: question has not specified T-Accounts so, I have provided Journal entry since it is optional to provide
T-Accounts.

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Transcribed Image Text

2) Allenton Company is a manufacturing firm that uses job-ordercosting. At the beginning of the year, the company's inventorybalances were as follows:Raw materials: $26,000Work in process $47,000Finished goods $133,000The company applies overhead to jobs using a predetermined overheadrate based on machine-hours. At the beginning of the year, thecompany estimated that it would work 31,000 machine-hours and incur$248,000 in manufacturing overhead cost. The following transactionswere recorded for the year:a. Raw materials were purchased, $421,000.b. Raw materials were requisitioned for use in production, $408,000($387,000 direct and $21,000 indirect).c. The following employee costs were incurred: direct labor,$145,000; indirect labor, $61,000; and administrative salaries,$190,000.d. Selling costs, $138,000.e. Factory utility costs, $14,000.f. Depreciation for the year was $121,000 of which $114,000 isrelated to factory operations and $7,000 is related to selling,general, and administrative activities.g. Manufacturing overhead was applied to jobs. The actual level ofactivity for the year was 29,000 machine-hours.h. The cost of goods manufactured for the year was $783,000.i. Sales for the year totaled $1,107,000 and the costs on the jobcost sheets of the goods that were sold totaled $768,000.j. The balance in the Manufacturing Overhead account was closed outto Cost of Goods Sold.Required:Complete the following T-accounts (or journal entries) byrecording the beginning balances and each of the transactionslisted above. Assume all transactions are conducted with cash.