ACCT 226 E3-4
Sales for the year (all on account) totaled $1,200,000. These goods cost $800,000 according to their job cost sheets.
Accounts receivable 1,200,000 Sales 1,200,000 Cost of goods sold 800,000 Finished goods 800,000
Advertising costs were incurred, $136,000
Advertising expense 136,000 Accounts payable 136,000
Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost.
COGS 480,000 Finished goods 480,000
Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
Finished goods 520,000 WIP 520,000
Cost of goods manufactured for the year, $770,000.
Finished goods 770,000 Work in process 770,000
Raw materials requisitioned for use in production (all direct materials), $185,000.
Work in process 185,000 Raw materials 185,000
Salary and wage costs were incurred: Direct labor (975 hours) $230,000 Indirect labor $90,000 Selling and administrative salaries $110,000
Work in process 230,000 Manufacturing overhead 90,000 Salaries expense 110,000 Salaries and wages payable 430,000
Depreciation recorded on factory equipment, $40,000.
MOH 40,000 Accumulated Depr 40,000
Rental cost incurred on buildings, $120,000 (85% related to factory operations, and the remainder related to selling and administrative facilities)
Manufacturing overhead 102,000 Rent expense 18,000 Accounts payable 120,000
Maintenance costs were incurred in the factory, $54,000
Manufacturing overhead 54,000 Accounts payable 54,000
Utility bills were incurred, $70,000 (90% related to factory operations, and the remainder related to selling and administrative activities)
Manufacturing overhead 63,000 Utilities expense 7,000 Accounts payable 70,000
Depreciation was recorded for the year, $95,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment)
Manufacturing overhead 76,000 Depreciation expense 19,000 Accumulated depreciation 95,000
Raw materials purchased for use in production, $200,000.
Raw materials 200,000 Accounts payable 200,000
The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October.
WIP (30,000x8) 240,000 MOH 240,000
Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials).
WIP 178,000 MOH 12,000 Raw Materials inv 190,000
Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.
WIP 90,000 MOH 110,000 Salaries & Wages payable 200,000