Suggested Solutions_ Assignment #3.pdf - 1...

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1 Assignment #3_Product Costing Suggested Solutions Assignment #3 _ Product Costing Part 1 _ Job Costing a) Calculating OAR Overhead Absorption Rate (OAR) = Total Estimated O/H/Total Estimated Units of CD OAR = $4,200,000/35,000 Direct Labour Hours = $120.00/Direct Labour Hour b) Calculating Total Manufacturing Cost for Each Job Direct Materials Direct Labour Manufacturing Overhead Applied Total Manufacturing Cost Job 401 $100,000 $220,000 (1,[email protected] $120.00) $144,000 $464,000 Job 402 81,000 190,000 (1,000 @ $120.00) $120,000 $391.000 Job 403 90,000 205,000 (1,100 @ $120.00) $132,000 $427,000 Job 404 150,000 290,250 (1,800 @ $120.00) $216,000 $656,250 Total $421,000 $905,250 $612,000 c) Journal Entries DATE ACCOUNTS & EXPLANATIONS DR CR (i) Materials Inventory $500,000 Accounts Payable $500,000 (ii) Manufacturing Wages $1,065,000 Wages Payable $106,500 (iii) WIP Inventory $421,000 Materials Inventory $421,000 WIP Inventory $905,250 Manufacturing Wages $905,250 (iv) Manufacturing Overhead $80,000 Materials Inventory $80,000 (v) Manufacturing Overhead $159,750 Manufacturing Wages $159,750 (vi) Manufacturing Overhead $300,000 Accumulated Depreciation-Factory Equipment $300,000 (vii) Manufacturing Overhead $112,750 Various Accounts $112,750 (viii) WIP Inventory $612,000 Manufacturing Overheads $612,000 (ix) Finished Goods $(464,000 + 391,000 +427,000) $1,282,000 WIP Inventory $1,282,000 (x)

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