Question: King Company produces variations of its product,
King Company produces variations of its product, a megatron, in response to custom orders from its customers. On June 1, the company had no inventories of goods in process or finished goods but held the following raw materials.
Material M . . . . . . . . 120 units @ $200 5 $24,000
Material R . . . . . . . . 80 units @ 160 5 12,800
Paint . . . . . . . . . . . . . 44 units @ 72 5 3,168
Total cost . . . . . . . . . $39,968
On June 3, the company began working on two megatrons: Job 450 for Encinita Company and
Job 451 for Fargo, Inc.
RequiredUsing Exhibit 2.2 as a guide,
Exhibit 2.2:
prepare job cost sheets for jobs 20 and 21. Using Exhibit 2.4 as a guide,
Exhibit 2.4:
prepare materials ledger cards for Material M, Material R, and paint. Enter the beginning raw materials inventory dollar amounts for each of these materials on their respective ledger cards. Then, follow instructions in this list of activities.
a. Purchased raw materials on credit and recorded the following information from receiving reports and invoices.
Receiving Report No. 20, Material M, 150 units at $200 each.
Receiving Report No. 21, Material R, 70 units at $160 each.
Instructions: Record these purchases with a single journal entry. Enter the receiving report information on the materials ledger cards.
b. Requisitioned the following raw materials for production.
Requisition No. 223, for Job 450, 80 units of Material M.
Requisition No. 224, for Job 450, 60 units of Material R.
Requisition No. 225, for Job 451, 40 units of Material M.
Requisition No. 226, for Job 451, 30 units of Material R.
Requisition No. 227, for 12 units of paint.
Instructions: Enter amounts for direct materials requisitions on the materials ledger cards and the job cost sheets. Enter the indirect material amount on the materials ledger card. Do not record a journal entry at this time.
c. Received the following employee time tickets for work in June.
Time tickets Nos. 1 to 10 for direct labor on Job 450, $40,000.
Time tickets Nos. 11 to 20 for direct labor on Job 451, $32,000.
Time tickets Nos. 21 to 24 for equipment repairs, $12,000.
Instructions: Record direct labor from the time tickets on the job cost sheets. Do not record a journal entry at this time.
d. Paid cash for the following items during the month: factory payroll, $84,000, and miscellaneous overhead items, $36,800.
Instructions: Record these payments with journal entries.
e. Finished Job 450 and transferred it to the warehouse. The company assigns overhead to each job with a predetermined overhead rate equal to 70% of direct labor cost.
Instructions: Enter the allocated overhead on the cost sheet for Job 450, fill in the cost summary section of the cost sheet, and then mark the cost sheet “Finished.†Prepare a journal entry to record the job’s completion and its transfer to Finished Goods.
f. Delivered Job 450 and accepted the customer’s promise to pay $290,000 within 30 days.Instructions: Prepare journal entries to record the sale of Job 450 and the cost of goods sold.
g. Applied overhead cost to Job 451 based on the job’s direct labor used to date.
Instructions: Enter overhead on the job cost sheet but do not make a journal entry at this time.
h. Recorded the total direct and indirect materials costs as reported on all the requisitions for the month.
Instructions: Prepare a journal entry to record these.
i. Recorded the total direct and indirect labor costs as reported on all time tickets for the month.Instructions: Prepare a journal entry to record these costs.
j. Recorded the total overhead costs applied to jobs.
Instructions: Prepare a journal entry to record the allocation of these overhead costs.
k. Compute the balance in the Factory Overhead account as of the end of June.
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EXHIBIT 2.2 Accounting Systom: Exhibit 2-2 File Edit Maintain Tasks Analysis Options Reports Window Help Job Cost Sheet Road Warriors, Los Angeles, California JOB COST SHEET Customer's Name Carroll Connor Job No. В15 Address 1542 High Point Dr. City & State | Malibu, California Job Description Level 1 Alam System on Ford Expedition Date promised March 15 Date started March 3 Date completed March 11 Direct Materials Direct Labor Overhead Requisition Time Ticke Rate Date Cost Date Cost Date Cost 3/3/2013 R-4698 100.00 3/3/2013 L-3393 120.00 3/11/2013 160% of 1,600.00 3/7/2013 R-4705 225.00 3/4/2013 L-3422 150.00 Direct Labor 3/9/2013 R-4725 180.00 3/5/2013 L-3456 180.00 Cost 60.00 90.00 3/10/2013 R4777 95.00 3/8/2013 L-3479 3/9/2013 L-3501 3/10/2013 L-3535 240.00 3/11/2013 L-3559 160.00 Total 600.00 Total 1,000.00 Total 1,600.00 REMARKS: Completed job on March 11, and shipped to customer on March 15. Met all specifications and requirements. SUMMARY: Materials 600.00 Labor 1,000.00 Overhead 1,600.00 Signed: C. Luther, Supervisor Total cost 3,200.00 EXHIBIT 2.4 MATERIALS LEDGER CARD Materials Ledger Card Road Warriors Los Angeles, California Item Alarm system wiring Maximum quantity 5 units M-347 Location in Storeroom Bin 137 2 units Stock No. Minimum quantity 1 unit Quantity to reorder Received Issued Balance Receiving Report Requi- Total sition Unit Total Number Units Price Price Number Units Price Price Units Price Price 225.00 225.00 |225.00 675.00 225.00 450.00 Unit Unit Total Date 3/4/2013 C-7117 2 225.00 450.00 3 3/7/2013 R-4705 1 225.00 225.00 2
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