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Cost accumulation in two departments Country Products manufactures quilt racks. Pine stock is introduced in Department 1, where the raw material is cut and assembled. In Department 2, completed racks are stained and packaged for shipment. Department 1 applies overhead on the basis of machine hours; Department 2 applies overhead on the basis of direct labor hours. The company's predetermined overhead rates were computed using the following information: Department 1 Department 2 Expected overhead $1,023,000 $837,320 Expected DLHs 8,800 48,400 Expected MHs 66,000 5,500 Sue Power contacted Country Products to produce 1,100 quilt racks as a special order. Power wanted the racks made from teak and to be made larger than the company's normal racks. Country Products designated Power's order as Job #462. During July, Country Products purchased $761,200 of raw material on account, of which $41,800 was teak. Requistions were issued for $748,000 of raw material, including all the teak. There were 627 direct labor hours worked (at a rate of $11 per DLH) and 5,280 machine hours recorded in Department 1; of these hours, 55 DLHs and 704 MHs were on Job#462. Department 2 had 3,146 DLHs (at a rate of $18 per DLH) and 396 MHs; of these, 348 DLHs and 44 MHs were worked on Job #462. Assume that all wages are paid in cash. Job #462 was completed on July 28 and shipped to Power. She was billed cost plus 20 percent. a. What are the predetermined overhead rates for Departments 1 and 2? Predetermined Overhead Rate Department 1 $ 15.5 per MH Department 2 $ 17.3 per DLH b. Prepare journal entries for the July transactions. Note: Round amounts to the nearest whole dollar. Note: List any multiple debits or any multiple credits in alphabetical order by accour Account Debit Credit 1 Raw Material Inventory 761,200 0 Accounts Payable 0 761,200 To record raw materials purchased on account 2 Work in Process Inventory-Job 462 - 41,800 0 Work in Process Inventoryother jobs - 706,200 0 Raw Material Inventory 0 748,000 To record the direct materials issued 3 Work in Process Inventory-Job 462 605 0 Work in Process Inventory-other jobs 6,292 0 Cash 0 6,897 To record the labor costs in Department 1 4 Work in Process Inventory-Job 462 10,912 0 Work in Process Inventory-other jobs - 70,928 0 Overhead Control 0 81,840 To record overhead applied in Department 1 5 Work in Process InventoryJob 462 6,264 0 Work in Process Inventoryother jobs - 50,364 0 Cash 0 56,628 To record the labor costs in Department 2 6 Work in Process Inventory-Job 462 761 x 0 Work in Process Inventoryother jobs 6,090 0 Overhead Control 0 6,851 x To record overhead applied in Department 2 7 Finished Goods Inventory-Job 462 60,342 x 0 Work in Process Inventory-Job 462 0 60,342 x To record the completion of Job #462

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