Question
Captain Hook Corporation is a manufacturer of "hooks" that uses Job-Order costing. Each hook produced is unique and can be customized with precious metals, such as silver or gold leaf, and precious stones, such as diamonds off pearls. The company follows a calendar year as its fiscal year. The company applies manufacturing overhead to jobs on the basis of machine-hours worked. The Pre-Determined Overhead Rate was based on a cost formula that estimated $4,500 of total manufacturing overhead for an estimated activity level of 750 machine hours or $6 per machine hour. Record beginning Balances as follows Raw Materials, were purchased on account $4,100 Raw Materials were requisitioned for use in production: $36000 Direct Materials and $2000 Indirect Materials. The following costs were accrued for employee services. Sales travel costs: $170 Factory utility costs $430 Advertising costs: $1,800 Manufacturing overhead was applied to production. Due to greater demand than expected for its products, the company used 800 machine hours on all jobs during the year. Goods costing $9,000 to manufacture according to their Job-Cost sheet mere completed during the year. Goods were sold on account to customers for $15,000; the goods cost $8,700 to manufacture.
Explanation / Answer
Raw materials inventory opening bal 200 Wip 3,600 accounts MOH 200 payble 4,100 balance 500
WIP inventory opening 150 Finished 9,000 Raw mat 3,600 wages 750 MOH 4,800 balance 300 Finished goods inventory opening 300 Cost of WIP 9,000 goods sold 8,700 balance 600 Manufacturing overhead Direct ma 200 WIP 4,800 Indirect lab 1,100 Bal 430 Cost of goods sold Finished 8,700 - 0 balance 8,700 Sales account 1,500 balance 1,500 Account receivable sales 1,500 Factory payroll WIP 750 MOH 1,100