Widmer Watercraft’s predetermined overhead rate for year 2015 is 200% of direct labor. Information on the company’s production activities during May 2015 follows. A. Purchased raw materials on credit, $220,000.
B. Materials requisitions record use of the following materials for the month.
Job 136 $48,500
Job 137 33,000
Job 138 19,400
Job 139 23,200
Job 140 7,400
Total direct materials 131,500
Indirect materials 20,000
Total materials used $151,500
C. Paid $15,250 cash to a computer consultant to reprogram factory equipment.
D. Time tickets record use of the following labor for the month. These wages were paid in cash.
Job 136 $12,300
Job 137 10,600
Job 138 37,700
Job 139 39,400
Job 140 3,200
Total direct labor 103,200
Indirect labor 24,000
Total $127,200
E. Applied overhead to Jobs 136, 138, and 139.
F. Transferred Jobs 136, 138, and 139 to Finished Goods.
G. Sold Jobs 136 and 138 on credit at a total price of $535,000.
H. The company incurred the following overhead costs during the month (credit Prepaid Insurance for
expired factory insurance).
Depreciation of factory building $68,500
Depreciation of factory equipment 36,500
Expired factory insurance 10,000
Accrued property taxes payable 37,000
I. Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the pre-determined overhead rate of 200% of direct labor cost.
Required:
1. Prepare a job cost sheet for each job worked on during the month.
2. Prepare journal entries to record the events and transactions a through i.
3. Prepare T-accounts for each of the following general ledger accounts, each of which started the month with a zero balance: Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Factory Payroll, Factory Overhead, Cost of Goods Sold. Post the journal entries from Part 2 to the following T-accounts
4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Work in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.