Required:1. Prepare journal entries to record the transactions for the year.2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from yourjournal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts).3A. Is Manufacturing Overhead underapplied or overapplied for the year?3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entriesand T-accounts you have prepared.Complete this question by entering your answers in the tabs below.Req 1View transaction list<Req 2Prepare journal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "No journal entryrequired" in the first account field. Do not round intermediate calculations.)Journal entry worksheet1Transactiona.Req 3A2Note: Enter debits before credits.Req 3BRaw materials purchased on account, $162,000.3 4 5 6 7 8Req 4General Journal…………..Debit11Credit> Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The companysells its birdcages through an extensive network of street vendors who receive commissions on their sales.The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predeterminedoverhead rate is based on a cost formula that estimated $84,000 of manufacturing overhead for an estimated activity level of $40,000direct labor dollars. At the beginning of the year, the inventory balances were as follows:Raw materialsWork in process.Finished goodsDuring the year, the following transactions were completed:$ 10,400$ 4,700$ 8,500a. Raw materials purchased on account, $162,000.b. Raw materials used in production, $148,000 (materials costing $126,000 were charged directly to jobs; the remaining materialswere indirect).c. Costs for employee services were incurred as follows:Direct laborIndirect labor.Sales commissionsAdministrative salaries$ 179,000$ 292,200$ 28,000$ 43,000d. Rent for the year was $18,200 ($13,600 of this amount related to factory operations, and the remainder related to selling andadministrative activities).e. Utility costs incurred in the factory, $19,000.f. Advertising costs incurred, $11,000.g. Depreciation recorded on equipment, $25,000. ($16,000 of this amount related to equipment used in factory operations; theremaining $9,000 related to equipment used in selling and administrative activities.)h. Manufacturing overhead cost was applied to jobs, $ ?i. Goods that had cost $228,000 to manufacture according to their job cost sheets were completed.j. Sales for the year (all paid in cash) totaled $511,000. The total cost to manufacture these goods according to their job cost sheetswas $219,000.

The journal entries are prepared to record the transactions on regular basis. The direct costs…

Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A View transaction list Req 4 Prepare journal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Journal entry worksheet < 1 Req 3B 2 3 4 5 6 7 Raw materials purchased on account, $162,000. Note: Enter debits before credits. Transaction General Journal 8 ***** ... 11 Debit Credit

Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A View transaction list Req 4 Prepare journal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Journal entry worksheet < 1 Req 3B 2 3 4 5 6 7 Raw materials purchased on account, $162,000. Note: Enter debits before credits. Transaction General Journal 8 ***** ... 11 Debit Credit

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 30P: San Mateo Optics, Inc., specializes in manufacturing lenses for large telescopes and cameras used in...

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San Mateo Optics, Inc., specializes in manufacturing lenses for large telescopes and cameras used in space exploration. As the specifications for the lenses are determined by the customer and vary considerably, the company uses a job-order costing system. Manufacturing overhead is applied to jobs on the basis of direct labor hours, utilizing the absorption- or full-costing method. San Mateos predetermined overhead rates for 20x1 and 20x2 were based on the following estimates. Jim Cimino, San Mateos controller, would like to use variable (direct) costing for internal reporting purposes as he believes statements prepared using variable costing are more appropriate for making product decisions. In order to explain the benefits of variable costing to the other members of San Mateos management team, Cimino plans to convert the companys income statement from absorption costing to variable costing. He has gathered the following information for this purpose, along with a copy of San Mateos 20x1 and 20x2 comparative income statement. San Mateo Optics, Inc. Comparative Income Statement For the Years 20x1 and 20x2 San Mateos actual manufacturing data for the two years are as follows: The companys actual inventory balances were as follows: For both years, all administrative expenses were fixed, while a portion of the selling expenses resulting from an 8 percent commission on net sales was variable. San Mateo reports any over-or underapplied overhead as an adjustment to the cost of goods sold. Required: 1. For the year ended December 31, 20x2, prepare the revised income statement for San Mateo Optics, Inc., utilizing the variable-costing method. Be sure to include the contribution margin on the revised income statement. 2. Describe two advantages of using variable costing rather than absorption costing. (CMA adapted)
Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data were compiled by the accountants before making any allocations: The total cost of purchasing and receiving parts used in manufacturing is 60,000. The company uses a job-costing system with a single indirect cost rate. Under this system, allocated costs were 48,000 and 12,000 for X and Y, respectively. If an activity-based system is used, what would be the allocated costs for each product?
Vargas, Inc., produces industrial machinery. Vargas has a machining department and a group of direct laborers called machinists. Each machinist is paid 25,000 and can machine up to 500 units per year. Vargas also hires supervisors to develop machine specification plans and to oversee production within the machining department. Given the planning and supervisory work, a supervisor can oversee three machinists, at most. Vargass accounting and production history reveal the following relationships between units produced and the costs of direct labor and supervision (measured on an annual basis): Required: 1. Prepare two graphs: one that illustrates the relationship between direct labor cost and units produced, and one that illustrates the relationship between the cost of supervision and units produced. Let cost be the vertical axis and units produced the horizontal axis. 2. How would you classify each cost? Why? 3. Suppose that the normal range of activity is between 2,400 and 2,450 units and that the exact number of machinists is currently hired to support this level of activity. Further suppose that production for the next year is expected to increase by an additional 400 units. How much will the cost of direct labor increase (and how will this increase be realized)? Cost of supervision?
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $75,000 of manufacturing overhead for an estimated activity level of $50,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials $ 10,300 Work in process $ 4,500 Finished goods $ 8,200 During the year, the following transactions were completed: Raw materials purchased on account, $167,000. Raw materials used in production, $149,000 (materials costing $126,000 were charged directly to jobs; the remaining materials were indirect). Costs for employee services were incurred as follows:…
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $84,000 of manufacturing overhead for an estimated activity level of $40,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials $ 10,700 Work in process $ 4,600 Finished goods $ 8,700 During the year, the following transactions were completed: Raw materials purchased on account, $ 163,000. Raw materials used in production, $146,000 (materials costing $126,000 were charged directly to jobs; the remaining materials were indirect). Costs for employee services were incurred as follows:…
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overhead for an estimated activity level of $200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials $ 25,000 Work in process $ 10,000 Finished goods $ 40,000 During the year, the following transactions were completed: Raw materials purchased on account, $275,000. Raw materials used in production, $280,000 (materials costing $220,000 were charged directly to jobs; the remaining materials were indirect). Costs for employee services were incurred as follows:…
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials $ 10,100 Work in process $ 4,500 Finished goods $ 8,700 During the year, the following transactions were completed: Raw materials purchased on account, $165,000. Raw materials used in production, $145,000 (materials costing $128,000 were charged directly to jobs; the remaining materials were indirect). Costs for employee services were incurred as follows: Direct…
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $67,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials $ 10,200 Work in process $ 4,800 Finished goods $ 8,400 During the year, the following transactions were completed: Raw materials purchased on account, $160,000. Raw materials used in production, $142,000 (materials costing $126,000 were charged directly to jobs; the remaining materials were indirect). Costs for employee services were incurred as follows: Direct…
Gold Nest Company, is a family owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor hours worked. Its predetermined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overhead for an estimated activity level of 1,500 direct labor hours, or $220 per direct labor hour. At the beginning of the year, the inventory balances were as follows: Raw Materials $ 25,000 Work in Process $ 10,000 Finished Goods $ 40,000 During the year, the following transactions were completed: Raw Materials purchased for cash, $275,000. Raw Materials used in production, $280,000 (materials costing $220,000 were charged directly to jobs, the remaining were indirect). Raw Materials ending inventory balance, $20,000. Cash paid to employees as…
Gold Nest Company of Guandong, China, makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system that applies overhead to jobs based on direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $85,000 of manufacturing overhead for an estimated activity level of $50,000 direct abor dollars. The beginning inventory balances were as follows: Raw materials Work in process Finished goods During the year, the following transactions were completed: a. Raw materials purchased on account, $167.000. b. Raw materials used in production, $145,000 (materials costing $124,000 were charged directly to jobs; the remaining materials were indirect). c. Cash paid to employees: Direct labor Indirect labor Sales commissions Administrative salaries d. Rent for the year was $18.100 ($13,200 related to factory operations, and…
Gold Nest Company of Guandong, China, makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system that applies overhead to jobs based on direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. The beginning inventory balances were as follows: Raw materials $ 10,800 Work in process $ 4,900 Finished goods $ 8,800 During the year, the following transactions were completed: Raw materials purchased on account, $162,000. Raw materials used in production, $144,000 (materials costing $123,000 were charged directly to jobs; the remaining materials were indirect). Cash paid to employees: Direct labor $ 155,000 Indirect labor $ 248,800 Sales commissions $ 23,000 Administrative salaries $ 42,000…
Gold Nest Company of Guandong, China, makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system that applies overhead to jobs based on direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $85,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. The beginning inventory balances were as follows: Raw materials Work in process Finished goods $ 10,900 $4,200 $ 8,500 During the year, the following transactions were completed: a. Raw materials purchased on account, $169,000. b. Raw materials used in production, $141,000 (materials costing $124,000 were charged directly to jobs; the remaining materials were indirect). c. Cash paid to employees: Direct labor Indirect labor Sales commissions Administrative salaries $ 157,000 $ 219,300 $ 28,000 49,000 $ d. Rent for the…