You work for Thunderduck Custom Tables Inc. This is the firstmonth of operations. The company designs and manufactures specialtytables. Each table is specially customized for the customer. Thismonth, you have been asked to develop and manufacture two newtables for customers. You will design and build the tables. This isa no nail, no screw, and no glue manufacturing ( no indirectmaterials used). You will be keeping track of the costs incurred tomanufacture the tables using Job #1 Cost Sheet and Job #2 CostSheet.
The cost of the direct materials that can be used to manufacturethe table are as follows. These cost are on a per unit basis.
Table Top $1,000.00
Table Leg $ 150.00
Drawer $ 300.00
The company uses a job order costing system and appliesmanufacturing overhead to jobs based on direct labor hours.
The company estimates that there will be 12 direct labor hoursworked during the month.
The estimated manufacturing overhead cost for the month is:
a. Factory supervisor salary per month $ 2,500.00
b. Rent for the factory per month $500.00
c. Depreciation of factory equipment per month $600.00
Total Estimated manufacturing overhead $ 3,600.00
What is the predetermined manufacturing overhead rate?
Step 2 The first order you received was to manufacture a tableusing a table top and four legs. This is your Job #1.
Step 3 The customer that has ordered Job #2, wants a table thatis the same as Job #1, but wants to also add a drawer to thetable.
Step 4 The following is a list of transactions that need to berecorded for the company for activity in the month of December.Record those in the "General Journal" tab of the excel file usingthe proper format. Please use the following accounts: AccountsReceivables, Raw materials, Work in process, Finished goods,Accumulated depreciation, Accounts payable, Salaries and wagespayable, Sales revenue, Manufacturing overhead, Cost of goods sold,Salaries and wages expense, Advertising expenses, and Depreciationexpense.
1-Dec Raw Materials purchased on account, $10,000.
5-Dec All Raw Materials needed for Job #1 were requisitionedfrom the material storage for use during the month. Assume allmaterials are direct. (After you journalize this entry please enterthe information into Job #1 Cost Sheet)
10-Dec The following employee costs were incurred but not paidduring the month:
There are three assembly employees that spend 2 hours each, $20per hour to make the table for Job #1. (After you journalize thisentry please enter the information into Job #1 Cost Sheet)
Salary for supervisor of the factory $3,000.
Administrative Salary $2,000.
15-Dec All Raw Materials needed for Job #2 were requisitionedfrom the material storage for use during the month. Assume allmaterials are direct. (After you journalize this entry please enterthe information into Job #2 Cost Sheet)
16-Dec Rent for the month of December for the factory buildingincurred but not paid $500.
17-Dec Advertising costs incurred but not paid for the month was$1,200.
20-Dec Depreciation for the month of December was recorded onequipment was $750 ($150 for equipment used in the factory and theremainder for equipment used in selling and administrativeactivities).
22-Dec Manufacturing overhead cost was applied based on directlabor hours to Job #1 based on the POHR determined on the "Job CostSheet". (After you journalize this entry please enter theinformation into Job #1 Cost Sheet)
26-Dec Job #1 was completed and transferred to Finished Goodsduring the month.
28-Dec The completed table from Job #1 was sold on account tothe customer for $15,000 during the month. (Hint: Make sure toaccount for the cost of the table that was sold using the cost fromthe job cost sheet.)
31-Dec Direct labor cost incurred but not paid for threeemployees to start manufacturing Job #2. The employees only workedone hour each, three hours total, $20 per hour during the month andthey did not complete their work on the job. (After you journalizethis entry please enter the information into Job #2 Cost Sheet)
31-Dec Manufacturing overhead cost was applied based on directlabor hours to Job #2 based on the POHR. Only three direct laborhours were worked on Job #2 during the month. (After you journalizethis entry please enter the information into Job #2 Cost Sheet)
31-Dec Any underapplied or overapplied overhead for the monthwas closed out to Cost of Goods Sold.
Step 5 Post the journal entries that you recorded on the"General Journal" tab to the "T-accounts" tab. This is thecompany's first month of business, so there will not be anybeginning balances. Compute the balance for each T-account afterall of the entries have been posted.
Step 6 Prepare a Schedule of Cost of Goods Manufactured and aSchedule of Cost of Goods Sold on the "Schedule of COGM and COGS"tab for Job #1 and Job #2 that were worked on during the month bythe company. Make sure to follow the format noted in your book (pg.87). (Hint: This is the company's first month of operations andtherefore the beginning balances will be zero.)
Step 7 Prepare an Income Statement for the month using theTraditional Format on the "Income Statement" tab.
Step 8 Answer the additional questions below
Check Figure: Cost of Goods Manufactured= $3,520, Net operatingincome=$6,730
What is the ending balance for raw materials?
What is the ending balance for work in process?
What is the ending balance for finished goods?
What is the actual manufacturing overhead cost incurred duringDecember before adjustment?
What is the total applied manufacturing overhead cost duringDecember before adjustment?
What is the unadjusted cost of goods sold?
Was the manufacturing overhead for the month of Decemberoverapplied/underapplied ?
What is the amount of Manufacturing overheadoverapplied/underapplied?
What is the adjusted cost of goods sold?
What is gross margin?
What is the total prime cost for Job#1?
What is the total conversion cost for job #1?
What is the total product cost for job#1?
What was the period cost incurred for the month of December?
What is the total variable cost incurred for Job #1(assume thatall selling and administrative cost and all manufacturing overheadcosts are fixed.)?
What is the contribution margin for Job #1 (assume that allselling and administrative cost and all manufacturing overheadcosts are fixed.)?
What would be the actual (not applied) total fixed manufacturingoverhead cost incurred for the company for the month if the orderin Job #1 is for five tables instead of one table assuming thiscost is with in the relevant range?