Bynum Manufacturing uses a job order cost system and applies - 13986

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Problem 20-1A

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Bynum Manufacturing uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2012, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of January 1, Job No. 49 had been completed at a cost of $90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account.

During the month of January, Bynum Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month.

1.

 

Purchased additional raw materials of $90,000 on account.

2.

 

Incurred factory labor costs of $65,000. Of this amount, $16,000 related to employer payroll taxes.

3.

 

Incurred manufacturing overhead costs as follows: indirect materials $17,000; indirect labor $15,000; depreciation expense on equipment $19,000; and various other manufacturing overhead costs on account $20,000.

4.

 

Assigned direct materials and direct labor to jobs as follows.

 

Job No.

 

Direct Materials

 

Direct Labor

50

 

$10,000

 

$5,000

51

 

39,000

 

25,000

52

 

30,000

 

20,000

 

 

 

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Calculate the predetermined overhead rate for 2012, assuming Bynum Manufacturing estimates total manufacturing overhead costs of $1,050,000, direct labor costs of $700,000, and direct labor hours of 20,000 for the year.

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Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50.

Prepare the journal entries to record the purchase of (a) raw materials, the (b) factory labor costs incurred, and the (c) manufacturing overhead costs incurred during the month of January. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the assignment of (a) direct materials, (b) direct labor, and (c) manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in part (a). (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Prepare the journal entry (or entries) to record the completion of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Prepare the journal entry (or entries) to record the sale of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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What is the balance in the Finished Goods Inventory account at the end of the month?

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What is the amount of over- or underapplied overhead?

 

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Problem 20-1A.docx
Problem 20-1A.d...