MAChap4_handoutproblem2 - on selling and administrative assets h Manufacturing overhead was applied to jobs The company’s predetermined overhead rate

Reeder Co. – Job Costing Example Reeder Co., a manufacturing company, incurred the following transactions during its most recent reporting period. a. Raw materials were purchased on account for $150,000. b. Raw materials that cost $160,000 were issued from the storeroom for use in production. Of this total, $136,000 was for direct materials and $24,000 for indirect materials. c. The following costs were incurred for employee services: direct labour, $200,000; indirect labour, $85,000; selling and administrative wages and salaries, $90,000. d. Utility costs of $40,000 were incurred in the factory. e. Prepaid insurance of $20,000 expired during the year. (80% related to factory operations and 20% to selling and administration.) f. Advertising costs of $100,000 were incurred during the year. g. Depreciation of $145,000 was accrued for the year on factory assets and $15,000

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Unformatted text preview: on selling and administrative assets. h. Manufacturing overhead was applied to jobs. The company’s predetermined overhead rate was based on the following estimates: manufacturing overhead, $315,000; direct labour cost, $210,000. i. Goods that cost $650,000 to manufacture according to their job cost sheets were completed and transferred to the finished goods warehouse. j. Sales for the year (all on credit) were $900,000. k. The goods that were sold had cost $600,000 to manufacture according to their job cost sheets. Assume the following beginning balances for the period:-Raw Materials: $20,000-WIP: $74,000-Finished Goods: $40,000 Required: Prepare all the necessary journal entries to reflect Reeder Co.’s activity, including adjustment(s) for overhead under- or over-applied....
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