Supplementary questions_Chp

3 since each prop is a unique design and may require

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3 Since each prop is a unique design and may require anything from a few hours to a month or more to complete, Fantastic Props uses a job-order costing system. Overhead in the fabrication shop is charged to props on the basis of direct labour cost. The company estimated that it would incur $80,000 in manufacturing overhead and $100,000 in direct labour cost during the year. The following transactions were recorded during the year: a. Raw materials, such as wood, paints, and metal sheeting, were purchased on account, $80,000. b. Raw materials issued to production, $90,000; $5,000 of this amount was for indirect materials. c. Payroll costs incurred and paid: direct labour $120,000; indirect labour $30,000; and selling and administrative salaries, $75,000. d. Fabrication shop utilities costs incurred, $12,000. e. Depreciation recorded for the year; $30,000 ($5,000 on selling and administrative assets; $25,000 on fabrication shop assets). f. Prepaid insurance expired, $4,800 ($4,000 related to fabrication shop operations, and $800 related to selling and administrative activities). g. Shipping expenses incurred, $40,000. h. Other manufacturing overhead costs incurred, $17,000 (credit Accounts Payable). i. Manufacturing overhead was applied to production. Overhead is applied on a basis of direct labour cost. j. Movie props that cost $310,000 to produce according to their job cost sheets were completed. k. Sales for the year totaled $450,000 and were all on account. The total cost to produce these movie props was $300,000 according to their job cost sheets. 1. Calculate the predetermined overhead rate. (2 marks) 3. Complete the T-accounts shown on next sheet to reflect the cost flows indicated in items 1 to 8 above and show ending balances for all accounts. (12 marks) T-accounts for Problem 3-13
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  • Winter '12
  • Farrar
  • Managerial Accounting, Generally Accepted Accounting Principles, Department Milling Assembly

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