Chapter 15 - ACCT 2102

During the current month, Wacholz Company incurs the following manufacturing costs. (a) Purchased raw materials of $17,800 on account. (b) Incurred factory labor of $40,700. Of that amount, $30,600 relates to wages payable and $10,100 relates to payroll taxes payable. (c) Factory utilities of $3,900 are payable, prepaid factory property taxes of $2,800 have expired, and depreciation on the factory building is $9,800. Prepare journal entries for each type of manufacturing cost.

(a) Raw Materials Inventory 17800 Accounts Payable 17800 (Purchases of raw materials on account) (b) Factory Labor 40700 Employer Payroll Taxes 10100 Factory Wages Payable 30600 (To record factory labor costs) (c) Manufacturing Overhead 16500 Prepaid Property Taxes 2800 Utilities Payable 3900 Accumulated Depreciation 9800 (To record overhead costs)

Milner Company is working on two job orders. The job cost sheets show the following. Job 201 Job 202 Direct materials $7,500 $8,950 Direct labor 3,950 7,900 Manufacturing overhead 5,500 10,100 Prepare the three summary entries to record the assignment of costs to Work in Process from the data on the job cost sheets.

(a) Work in Process Inventory 16450 Raw Materials Inventory 16450 (To assign materials to jobs) (b) Work in Process Inventory 11850 Factory Labor 11850 (To assign labor to jobs) (c) Work in Process Inventory 15600 Manufacturing Overhead 15600 (To assign overhead to jobs)

Marquis Company estimates that annual manufacturing overhead costs will be $825,000. Estimated annual operating activity bases are direct labor cost $450,000, direct labor hours 53,000, and machine hours 105,000. Compute the predetermined overhead rate for each activity base.

Overhead rate per direct labor cost (Manufacturing Overhead Costs/Direct Labor Cost x 100) - 183.33% Overhead rate per direct labor hour (Manufacturing Overhead Costs/Direct Labor Hours) - $15.57 Overhead rate per machine hour (Manufacturing Overhead Costs/Machine Hours) - $7.86

Washburn Company produces earbuds. During the year, manufacturing overhead costs are expected to be $217,000. Expected machine usage is 2,700 hours. The company assigns overhead based on machine hours. Job No. 551 used 90 machine hours.

Predetermined Overhead Rate

At December 31, balances in Manufacturing Overhead are Shimeca Company—debit $2,100, Garcia Company—credit $1,067. Prepare the adjusting entry for each company at December 31, assuming the adjustment is made to cost of goods sold.

Shimeca Company Dec. 31 Cost of Good Sold 2100 Manufacturing Overhead 2100 Garcia Company Dec. 31 Manufacturing Overhead 1067 Cost of Goods Sold 1067