Data
MOH DL Costs Job 248 Job 249 Job 250 Job 251 Job 252 POAR Drop Down POAR Drop Down 2
290000 145000 DL Hours 290 122 100 99 250 Labor Hour of
DM 24843 2548 4831 2155 18435 DL Cost pe
Labor Rate 32 Completed in Q1 Yes Yes No No Yes Machine Hou
Quoted Sales Price 79654 21654 18946 10542 62467
Sale Type Credit - - - Cash
OH Info
Plant Janitorial wages 15,489
Sales Salaries Expense 18,543
Delivery Expense 1,500
Utilities for Plant paid immediately 45,806
Rent on Plant paid immediately 6,569
Customer Service Hotline Costs 8,190
Plant Supervisor Wages 5043
Plant Insurance Previously Paid 2436
Plant Prop Taxes incu
ed (not paid) 3457
Indirect Materials used during month 8743
RM Purchased 124648
RM Beg Bal 12546
UNITS
Beginning Work-in-Process Inventory 125 units
Transfe
ed in from Internal Assembly 3845 units
Completed and transfe
ed out to Testing 2758 units
Ending Work-in-Process Inventory 25% complete for conversion
COSTS
Beginning Work-in-Process Inventory 680
Transfe
ed in from Internal Assembly 21570
Costs added during September:
Direct Materials 5,486
Direct labor 1004
Manufacturing overhead allocated 3504
Beg WIP Information
transfe
ed in costs 136
materials costs 340
conversions costs 204
CustomAns
Req 1 Compute Nerdzy Computer Company’s predetermined OH allocation rate for this year.
Predetermined OH Rate = 200%
Tene Greenhood: Tene Greenhood:
estimated MOH / est. DL Costs
of DL Cost
MOH 290000 2
DL Costs 145000
Labor Rate 32 Req 2 Compute the total cost for each job.
Job 248 Job 249 Job 250 Job 251 Job 252
DM Costs
Tene Greenhood: Tene Greenhood:
Pulled directly from the problem data. $ 24,843 $ 2,548 $ 4,831 $ 2,155 $ 18,435
Job Records for September DL Costs
Tene Greenhood: Tene Greenhood:
DL hours * DL Cost 9280 3904 3200 3168 8000
Job 248 Job 249 Job 250 Job 251 Job 252 MOH
Tene Greenhood: Tene Greenhood:
Since MOH is based on DL Cost, you will multiply the above DL cost * the POAR that you found in req 1
18560 7808 6400 6336 16000
DL Hours 290 122 100 99 250 Total Cost $ 52,683 $ 14,260 $ 14,431 $ 11,659 $ 42,435
DM $ 24,843 $ 2,548 $ 4,831 $ 2,155 $ 18,435
Completed in Q1 Yes Yes No No Yes
Quoted Sales Price 79654 21654 18946 10542 62467 Req 3
Tene Greenhood: Tene Greenhood:
**Almost all of the #s for these journal entries are given in the additional information in the problem data. Page 925 of the text has a summary of almost all of the same journal entries or ones very similar to these.
Sale Type Credit - - - Cash Raw Materials Inventory $ 124,648
Accounts Payable $ 124,648
Purchased raw materials on account.
Additional Information
Plant Janitorial wages $ 15,489 Work In Process Inventory
Tene Greenhood: Tene Greenhood:
These will be a combination of WIP (for direct costs) and MOH (for indirect costs). The direct costs are calculated in your above table and the indirect costs are going to come from the info on the left.
52,812
Sales Salaries Expense 18,543 Manufacturing Overhead 8,743
Delivery Expense 1,500 Raw Materials Inventory 61,555
Utilities for Plant paid immediately 45,806 Transfe
ed direct and indirect materials to production.
Rent on Plant paid immediately 6,569
Customer Service Hotline Costs 8,190 Work In Process Inventory 27,552
Plant Supervisor Wages 5,043 Manufacturing Overhead 20,532
Plant Insurance Previously Paid 2,436 Salaries (and Wages) Payable 48,084
Plant Prop Taxes incu
ed (not paid) 3,457 Assigned labor to monthly production
Indirect Materials used during month 8,743
RM Purchased 124,648 Manufacturing Overhead
Tene Greenhood: Tene Greenhood:
These next 4 transactions will all be DR to MOH. You are accumulating all of the indirect costs in the MOH account and then will later assign MOH costs to each specific job. I would also recommend keeping a T account of MOH because you will have to adjust it to zero it out at the end.
45,806
RM Beg Bal 12,546 Cash 45,806
Paid plant utilities
Manufacturing Overhead 6,569
Cash 6,569
Paid rent on plant
These should have all been calculated as 200% of DL Cost
Inco
ect because of MOH e
or, points awarded for co
ect calculation. Manufacturing Overhead 2,436
You used the beg. MOH, but this should be the indirect materials incu
ed during the month. Partial Credit. Prepaid Insurance 2,436
Inco
ect because of previous mistake, partial credit. To record insurance expense
52812, sum of DM from Req 2
27552, sum of DL from req 2 Manufacturing Overhead 3,457
55104, Sum of MOH from Req 2 Property Tax Payable 3,457
MOH, costs are accumulated in MOH and then allocated to the jobs. To accrue taxes.
109378, sum of job costs from job 248, 249, 252
52683, the total job cost from job 248 that you determined in req 2 Work In Process Inventory
Tene Greenhood: Tene Greenhood:
In order to allocate OH to the jobs, you will DR WIP (increasing that inventory account) and CR MOH ( decreasing the MOH account). This decrease to MOH is important because you have been increasing that account with all of your indirect costs and now we are decreasing it by assigning those costs to the jobs. You already calculated the MOH that should be allocated to each job in Req 2, you just need to add all of those together.
Tene Greenhood: Tene Greenhood:
**Almost all of the #s for these journal entries are given in the additional information in the problem data. Page 925 of the text has a summary of almost all of the same journal entries or ones very similar to these. 55,104
42435, the total job cost from job 252 that you determined in req 2 Manufacturing Overhead 55,104
32439, I would recommend keeping a T account to track all the DR and CR to the MOH account (all of you accumulation and allocation), which will allow you to quickly see the balance, which will be the amount you need to adjust. Allocated overhead to jobs in progress
Finished Goods Inventory
Tene Greenhood: Tene Greenhood:
In this journal you need to increase FG for the jobs that were completed and decrease WIP for those same jobs (it is really just a transaction of the movement). The “additional info” indicates which jobs are completed and Req 2 shows the total job costs for each of those jobs (all 3 jobs will be transfe
ed to FG with one transaction).
109,378
Work In Process Inventory 109,378
Transfe
ed Completed jobs to finished goods inventory
Accounts Receivable
Tene Greenhood: Tene Greenhood:
When we sell goods, we first show the actual sales revenue and an increase to either cash or A/R (check the additional info to see if we were paid cash or if we invoiced the customer along with the sales price). The second transaction is associated with the removal of that product from our inventory, so it includes an increase to the COGS and a decrease in the FG inventory account. The value associated with this portion of the transaction relates to the job cost determined in req 2. Same goes for the below transaction.
79,654
Sales Revenue 79,654
Cost of Goods Sold 52,683
Finished Goods Inventory 52,683
To record sale of Job 248 (Hint: record sales transaction first and then inventory transaction next)
Cash 62,467
Sales Revenue 62,467
Cost of Goods Sold 42,435
Finished Goods Inventory 42,435
To record sale of Job 252
Cost of Goods Sold
Tene Greenhood: Tene Greenhood:
As I mentioned in a previous comment, if you kept a T account of all of of your DR & CR entries to MOH you will be left with a balance that you need to close out (MOH needs to be zero at the end of the period). MOH gets closed out to COGS because we either over or under stated COGS by inco
ectly predicting the amounts that were used to calculate the POAR. It is impossible to estimate those values exactly, so it is expected that we will have to complete this adjusting entry every period.
Tene Greenhood: Tene Greenhood:
These will be a combination of WIP (for direct costs) and MOH (for indirect costs). The direct costs are calculated in your above table and the indirect costs are going to come from the info on the left.
Tene Greenhood: Tene Greenhood:
When we sell goods, we first show the actual sales revenue and an increase to either cash or A/R (check the additional info to see if we were paid cash or if we invoiced the customer along with the sales price). The second transaction is associated with the removal of that product from our inventory, so it includes an increase to the COGS and a decrease in the FG inventory account. The value associated with this portion of the transaction relates to the job cost determined in req 2. Same goes for the below transaction.
Tene Greenhood: Tene Greenhood:
estimated MOH / est. DL Costs
Tene Greenhood: Tene Greenhood:
Pulled directly from the problem data. 32,439
Manufacturing Overhead 32,439
Adjusted Manufacturing Overhead
Chart of Accounts
Accounts Payable
Accounts Receivable
Accumulated Depletion
Accumulated Depreciation
Administrative Expenses
Advertising Expense
Allowance for Bad Debts
Amortization Expense
Available‐for‐Sale Debt Investments
Bad Debts Expense
Bank Expense
Bonds Payable
Building
Cash
Cash Short & Ove
Common Stock
Common Stock Dividend Distributable
Copyright
Cost of Goods Sold
Credit Card Expense
Delivery Expense
Depletion Expense
Depreciation Expense
Discount on Bonds Payable
Dividend Revenue
Dividends
Dividends Payable
Employee Bonus Expense
Employee Bonus Payable
Employee Income Taxes Payable
Equipment
Equity Investments
Estimated Returns Inventory
Estimated Wa
anty Payable
Fair Value Adjustment ‐ Available‐for‐Sale
Fair Value Adjustment ‐ Trading
Federal Unemployment Taxes Payable
FICA ‐ Medicare Taxes Payable
FICA ‐ OASDI Taxes Payable
Finished Goods Inventory
Franchise
Freight In
Furniture
Gain on Disposal
Gain on Retirement of Bonds Payable
Goodwill
Held‐to‐Maturity Debt Investments
Income Summary
Income Tax Expense
Income Tax Payable
Insurance Expense
Interest Expense
Interest Payable
Interest Receivable
Interest Revenue
Land
Land Improvements
Loss on Disposal
Manufacturing Overhead
Merchandise Inventory
Mortgages Payable
Natural Resources
Notes Payable
Notes Receivable
Office Furniture
Office Supplies
Owner's Capital
Owner's Withdrawals
Paid‐In Capital From Treasury Stock Transactions
Paid‐In Capital in Excess of Par ‐ Common
Paid‐In Capital in Excess of Par ‐ Prefe
ed
Paid‐In Capital in Excess of Stated ‐ Common
Patent
Payroll Tax Expense
Petty Cash
Prefe
ed Stock
Premium on Bonds Payable
Prepaid Insurance
Prepaid Rent
Property Tax Payable
Purchase Discounts
Purchase Returns and Allowances
Purchases
Raw Materials Inventory
Refunds Payable
Rent Expense
Rent Payable
Repairs and Maintenance Expense
Retained Earnings
Revenue From Investments
Salaries (and Wages) Expense
Salaries (and Wages) Payable
Sales Discounts Forfeited
Sales Revenue
Sales Tax Payable
Service Revenue
State Unemployment Taxes Payable
Supplies Expense
Trademark
Trading Debt Investments
Treasury Stock ‐ Common
Truck
Unearned Revenue
Unrealized Holding Gain ‐ Available‐for‐Sale
Unrealized Holding Gain ‐ Fair Value
Unrealized Holding Loss ‐ Available‐for‐Sale
Unrealized Holding Loss ‐ Fair Value
Utilities Expense
Utilities Payable
Vacation Benefits Expense
Vacation Benefits Payable
Wa
anty Expense
Work In Process Inventory
GenericAns
NERDZY Computer Company
Tene Greenhood: Tene Greenhood:
Starting on page 975 of the eText you will find the info on how to prepare the production cost report for process with trsf in
UNITS Production Cost Report - External Assembly DEPARTMENT
Beginning Work-in-Process Inventory 125 units Month Ended September 30
Transfe
ed in from Internal Assembly 3845 units
Completed and transfe
ed out to Testing 2758 units Equivalent Units
Ending Work-in-Process Inventory 0.25 complete for conversion UNITS Physical Units Transfe
ed In Direct Materials Conversion Costs
COSTS Units to account for:
Beginning Work-in-Process Inventory 680 Beginning work-in-process 125
Transfe
ed in from Internal Assembly 21570 Transfe
ed In 3,845
Costs added during September: Total units to account for 3,970
Direct Materials 5486
Direct labor 1004 Units accounted for:
Manufacturing overhead allocated 3504 Completed and transfe
ed out 2,758 2,758
Tene Greenhood: Tene Greenhood:
In all the processes that follow the first, there will be units and costs trsf in. The trsf in is just 100% of what you have on the left
2,758 2,758
Tene Greenhood: Tene Greenhood:
Because these units have been completed and trsf out, that means they are 100% complete and will be equal to far left column.
Ending work-in-process 1,212 1,212 1,212
Tene Greenhood: Tene Greenhood:
The directions sheet indicates that materials are added at the