Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company
ID: 2533568 • Letter: M
Question
Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.
Each knitter has a knitting machine that is used about 2/3 of the knitter’s time, the rest of the knitter’s time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.
The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.
9.
UNADJUSTED TRIAL BALANCE
November 30, 20Y8
1
Cash
20,000.00
2
Accounts Receivable
1,000.00
3
Supplies
200.00
4
Materials
5,000.00
5
Work in Process
5,404.00
6
Equipment
12,000.00
7
Accumulated Depreciation-Equipment
825.00
8
Accounts Payable
150.00
9
Common Stock
10,000.00
10
Retained Earnings
12,000.00
11
Dividends
18,096.00
12
Sales
307,500.00
13
Cost of Goods Sold
255,040.00
14
Factory Overhead
15.00
15
Wages Expense
13,750.00
16
Totals
330,490.00
n330,490.00
PREDETERMINED FACTORY OVERHEAD RATE
Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).
Estimated Selected Amounts for the Year
Calculate the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.
A. 9.60 per dlh B.6.60 per dlh C.10.20 D. another amount per dlh E. 9.43 per dlh
Answer job cost sheets
Add the amounts in requirements 2(B), 3(C), and 6(C) to the appropriate areas of the following job cost sheets. If there is no amount or an amount is zero, enter "0". If required, round your answers to the nearest cent.
Journal
Journalize the entries in requirements 2 - 8. Refer to the Chart of Accounts for exact wording of account titles.
Final question
What are the balances in the following accounts as of December 31?
Required: 1. Review the data in the Predetermined Factory Overhead Rate panel, and compute the predetermined factory overhead rate for POGP Company. 2. On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition panel. A. Journalize the entry to record the addition of the materials to Work in Process.* B. On the Job Cost Sheets panel, add the materials to the Job Cost Sheet for Job 83. 3. On December 15, review the source documents on the Time Tickets panel. A. Journalize the entry to record the addition of direct labor to Work in Process for the period December 1 through December 15.* B. Journalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15.* C. On the Job Cost Sheets panel, add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 62 for the period December 1 through December 15. 4. On December 21, Job 62 is completed. Review the Job Cost Sheets panel and your journal entries. Journalize the entry to move the associated costs to the Finished Goods account.* 5. On December 22, 75 of the 100 sweaters from Job 62 are sold on account for $125 each. Journalize the following transactions:* A. The entry to record the sale. B. The entry to record the transfer of costs from Finished Goods to Cost of Goods Sold. 6. On December 31, the last work day of the year for the knitters, review the source documents on the Time Tickets panel. A. Journalize the entry to record the addition of direct labor to Work in Process for the period December 16 through December 31.* B. Journalize the entry to record the addition of factory overhead to Work in Process for the period December 16 through December 31.* C. On the Job Cost Sheets panel, add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 83 for the period December 16 through December 31. 7. On December 31, journalize the following transactions.* Note that expenses (B), (C), and (D) were paid in cash. A. One month’s depreciation on equipment B. One month’s payroll for all employees C. One month’s rent of $1,000 D. One month’s utilities of $1,275 8. On December 31, prepare the journal entry to dispose of the balance in the Factory Overhead account.*9.
What are the balances in the following accounts as of December 31? A. Materials B. Work in Process C. Finished Goods D. Factory Overhead E. Cost of Goods Sold *Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS POGP Company General Ledger ASSETS 110 Cash 112 Accounts Receivable 117 Supplies 118 Materials 119 Work in Process 120 Finished Goods 125 Equipment 126 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 211 Wages Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary REVENUE 410 Sales EXPENSES 510 Cost of Goods Sold 520 Factory Overhead 525 Wages ExpenseUNADJUSTED TRIAL BALANCE
November 30, 20Y8
ACCOUNT TITLE DEBIT CREDIT1
Cash
20,000.00
2
Accounts Receivable
1,000.00
3
Supplies
200.00
4
Materials
5,000.00
5
Work in Process
5,404.00
6
Equipment
12,000.00
7
Accumulated Depreciation-Equipment
825.00
8
Accounts Payable
150.00
9
Common Stock
10,000.00
10
Retained Earnings
12,000.00
11
Dividends
18,096.00
12
Sales
307,500.00
13
Cost of Goods Sold
255,040.00
14
Factory Overhead
15.00
15
Wages Expense
13,750.00
16
Totals
330,490.00
n330,490.00
PREDETERMINED FACTORY OVERHEAD RATE
Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).
Estimated Selected Amounts for the Year
Estimated depreciation on equipment $1,200.00 Estimated total Office Manager/Knitting Supervisor wages $30,000.00 Estimated office utilities $3,000.00 Estimated factory utilities $4,800.00 Estimated factory rent $12,000.00 Activity Base Data Estimated number of DLH for the year 5,000 Estimated number of MH for the year 3,500Calculate the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.
A. 9.60 per dlh B.6.60 per dlh C.10.20 D. another amount per dlh E. 9.43 per dlh
Time Ticket No. 1255 Name: Susan Blake Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 62 65 $20.00 $1,300.00 12/16-12/31 83 103 $20.00 $2,060.00 Total Cost $3,360.00 Time Ticket No. 2274 Name: Josh Porter Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 62 75 $20.00 $1,500.00 12/16-12/31 83 88 $20.00 $1,760.00 Total Cost $3,260.00 Time Ticket No. 3923 Name: Mary Jones Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 62 60 $20.00 $1,200.00 12/16-12/31 83 109 $20.00 $2,180.00 Total Cost $3,380.0Answer job cost sheets
Add the amounts in requirements 2(B), 3(C), and 6(C) to the appropriate areas of the following job cost sheets. If there is no amount or an amount is zero, enter "0". If required, round your answers to the nearest cent.
Job 62 100 units: Sweaters Direct Materials Direct Labor Factory Overhead Total Balance Dec. 1 $5,000 $300 $104 $5,404 Dec. 15 Total Cost Unit Cost Job 83 200 units: Sweater vests Direct Materials Direct Labor Factory Overhead Total Job Cost Balance Dec. 1 $0 $0 $0 $0 Dec. 10 Dec. 31 Total CostJournal
Journalize the entries in requirements 2 - 8. Refer to the Chart of Accounts for exact wording of account titles.
Final question
What are the balances in the following accounts as of December 31?
Materials Work in Process Finished Goods Factory Overhead Cost of Goods SoldExplanation / Answer
1. Predetermined factory overhead rate for POGP Company Factory Overheads Estimated depreciation on equipment $1,200 Estimated total office manager/knitting supervisor wages $30,000 Estimated office utilities $3,000 Estimated factory utilities $4,800 Estimated factory rent $12,000 Total Factory overheads $51,000 Estimated number of DLH for the year 5,000 Predetermined factory overhead rate = factory overheads/DLH for the year = $51000/5000 = $10.20 per DLH 2 A. Journal entry to record the addittion of the materials to Work in process Work in Process $5,000 Materials $5,000 3 A. Journal entry to record the addition of direct labour to Work in Process for the period December 1 through December 15 Work in process $4,000 Wages payable $4,000 (Wages for all the three employees) 3 B. Journal entry to record the addition of factory overheads to Work in Process for the period December 1 through December 15 Work in Process $2,040 Factory Overhead $2,040 Note: Total hour worked by all the three employees = 200 DLH Predetermined factory overhead rate = $10.20 Factory overheads = 200 x 10.20 = $2040 4. Journal entry to move the associated costs for Job 62 to the finished goods account Finished Goods $11,444 Work in Process $11,444 5 A. Journal entry to record the sale Accounts receivable $9,375 Sales $9,375 Sales = 75 units x $125 each = $9375 5 B. Journal entry to record transfer of costs from Finished goods to Cost of Goods Sold Cost of Goods Sold $8,583 Finished Goods $8,583 Cost of Goods Sold = $114.44 x 75 units = $8583 6 A. Journal entry to record the addition of direct labour to Work in Process for the period December 16 through December 31 Work in process $6,000 Wages payable $6,000 (Wages for all the three employees) 6 B. Journal entry to record the addition of factory overheads to Work in Process for the period December 16 through December 31 Work in Process $3,060 Factory Overhead $3,060 Note: Total hour worked by all the three employees = 300 DLH Predetermined factory overhead rate = $10.20 Factory overheads = 300 x 10.20 = $3060 7 A. Journal entry to record the one months depreciation on equipment Depreciation $100 Accumulated Depreciation-Equipment $100 Cost of 3 knitting machines (2400 x 3) $7,200 Cost of packaging machine $4,800 Total $12,000 Depreciation for a year (12000/10years) $1,200 Depreciation for a month (1200/12 months) $100 7 B. Journal entry for one month's payroll all employees Wages expenses $1,250 Wages payable $10,000 Factory overhead $1,250 Cash $12,500 Wages expenses for office manager = ($30000/12)/2 = $1250 Knitting supervisor wages $1250 will be debited to Factory overhead as it is related to the product. 7 C. Journal entry for one month's rent Factory overhead $1,000 Cash $1,000 7 D. Journal entry to record one month's utilities Factory overhead $1,275 Cash $1,275 8. Journal entry to dispose of the balance in the factory overhead account Factory overhead $1,590 Cost of Goods sold $1,590 9. Balances in the following accounts as of December 31 A. Materials $0 B. Work in Process $14,060 C. Finished Goods $2,861 D. Factory Overhead $0 E. Cost of Goods Sold $262,033 Job Cost Sheet Job 62 100 units Sweaters Direct Materials Direct Labour Factory Overhead Total Balance Dec. 1 $5,000 $300 $104 $5,404 Dec. 15 $4,000 $2,040 $6,040 Total Cost $11,444 Unit Cost $114.44 Job 83 200 units Sweater Vests Direct Materials Direct Labour Factory Overhead Total Balance Dec. 1 $0 $0 $0 $0 Dec. 10 $5,000 $5,000 Dec. 31 6000 3060 $9,060 Total Cost $14,060