Pittman Company uses normal costing in its job-costing system. Partially complet
ID: 2336421 • Letter: P
Question
Pittman Company uses normal costing in its job-costing system. Partially completed T-accounts and additional information for Pittman for 2017 are as follows:
Direct Materials Control
Work-in-Process Control
Finished Goods Control
1-1-2017
43,000
230,000
1-1-2017
40,000
1-1-2017
8,000
758,100
133,000
Dir. Manuf.
923,380
labor
350,000
Manufacturing Overhead Control
Manufacturing Overhead Allocated
Cost of Goods Sold
512,000
a.
Direct manufacturing labor wage rate was $10 per hour.
b.
Manufacturing overhead was allocated at $13 per direct manufacturing labor-hour.
c.
During the year, sales revenues were $1,070,000, and marketing and distribution costs were $123,000.
1.
What was the amount of direct materials issued to production during 2017?
2.
What was the amount of manufacturing overhead allocated to jobs during 2017?
3.
What was the total cost of jobs completed during 2017?
4.
What was the balance of work-in-process inventory on December 31, 2017?
5.
What was the cost of goods sold before proration of under- or overallocatedoverhead?
6.
What was the under- or overallocated manufacturing overhead in 2017?
7.
Dispose of the under- or overallocated manufacturing overhead using thefollowing:
a.
Write-off to Cost of Goods Sold
b.
Proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold
8.
Using each of the approaches in requirement 7, calculate Pittman's
operating income for 2017.
9.
Which approach in requirement 7 do you recommend Pittman use? Explain your answer briefly.
Direct Materials Control
Work-in-Process Control
Finished Goods Control
1-1-2017
43,000
230,000
1-1-2017
40,000
1-1-2017
8,000
758,100
133,000
Dir. Manuf.
923,380
labor
350,000
Manufacturing Overhead Control
Manufacturing Overhead Allocated
Cost of Goods Sold
512,000
Explanation / Answer
Solution 1:
Direct material issued to production during 2017 = Credit to direct material control = $230,000
Solution 2:
Amount of manufacturing overhead allocated to jobs during 2017 = Direct labor hours * Overhead rate
= ($350,000/10) * $13 = $455,000
Solution 3:
Total cost of jobs completed during 2017 = Debit to finished goods control = $923,380
Solution 4:
Balance of work-in-process inventory on December 31, 2017 = $40,000 + $230,000 + $350,000 + $455,000 - $923,380 = $151,620
Solution 5:
Cost of goods sold before proration of under- or over allocated overhead = Credit to finished goods control account
= $758,100
Solution 6:
Manufacturing overhead incurred = $512,000
Manufacturing overhead applied = $455,000
Underapplied overhead = $512,000 - $455,000 = $57,000
Solution 7a:
Solution 7b:
Ending WIP = $151,620
Ending Finished goods inventory = $8,000 + $923,380 - $758.100 = $173,280
Uadjusted COGS = $758,100
Closing to under applied overhead to :
Ending WIP = $57,000 * $151,620 / ($151,620 +$173,280 + $758,100) = $7,980
Finished goods = $57,000 * $173,280 / ($151,620 +$173,280 + $758,100) = $9,120
Cost of goods sold = $57,000 * $758,100/ ($151,620 +$173,280 + $758,100) = $39,900
Solution 8a:
Solution 8b:
Note: I have answered more than required parts as per chegg policy, kindly post separate question for answer of last part.
Journal Entries - Pittman Company Event Particulars Debit Credit a Cost of goods sold Dr $57,000.00 To Manufacturing overhead $57,000.00 (To disposed off underapplied overhead)