Carib Tings & More does hand-crafted memorabilia for the tourism industry, in which each batch of items is a job. The company has a highly machine intensive production process, so it allocates manufacturing overhead based on machine hours. Carib Tings & More pre-determined overhead application rate for 2024 was computed from the following data: Total estimated factory overheads $2,400,000 Total estimated machine hours 40,000 At the end of May 2024, Carib Tings & More reported work in process inventory of $176,000. During June 2024, Carib Tings & More actually used 3,000 machine hours and recorded the following transactions. Purchased $324,000 worth of materials on account. Separately, Carib Tings & More paid a $2,500 bill for freight in. i) ii) Manufacturing wages incurred $400,000 iii) Materials requisitioned (includes $30,000 of indirect materials) $420,000 iv) Assigned manufacturing wages, 85% direct labour, 15% indirect labour v) vi) Depreciation expense on factory equipment used on the different jobs Other manufacturing overhead incurred $95,000 $35,000 vii) Allocated manufacturing overhead for June 2024 viii) Cost of jobs completed ix) Cost of jobs sold (on account) at a margin of 33%% on sales $1,015,000 $985,000 Required: (a) Compute Carib's predetermined manufacturing overhead rate for 2024. (b) State the journal entries necessary to record the above transactions in the general journal. Assume that Carib uses the perpetual inventory system. (c) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account and state the balance on the account before performing end of period closing entries. Show the journal entries necessary to dispose of the variance. (d) What is the balance in the Cost of Goods Sold account after the adjustment?
Carib Tings & More does hand-crafted memorabilia for the tourism industry, in which each batch of items is a job. The company has a highly machine intensive production process, so it allocates manufacturing overhead based on machine hours. Carib Tings & More pre-determined overhead application rate for 2024 was computed from the following data: Total estimated factory overheads $2,400,000 Total estimated machine hours 40,000 At the end of May 2024, Carib Tings & More reported work in process inventory of $176,000. During June 2024, Carib Tings & More actually used 3,000 machine hours and recorded the following transactions. Purchased $324,000 worth of materials on account. Separately, Carib Tings & More paid a $2,500 bill for freight in. i) ii) Manufacturing wages incurred $400,000 iii) Materials requisitioned (includes $30,000 of indirect materials) $420,000 iv) Assigned manufacturing wages, 85% direct labour, 15% indirect labour v) vi) Depreciation expense on factory equipment used on the different jobs Other manufacturing overhead incurred $95,000 $35,000 vii) Allocated manufacturing overhead for June 2024 viii) Cost of jobs completed ix) Cost of jobs sold (on account) at a margin of 33%% on sales $1,015,000 $985,000 Required: (a) Compute Carib's predetermined manufacturing overhead rate for 2024. (b) State the journal entries necessary to record the above transactions in the general journal. Assume that Carib uses the perpetual inventory system. (c) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account and state the balance on the account before performing end of period closing entries. Show the journal entries necessary to dispose of the variance. (d) What is the balance in the Cost of Goods Sold account after the adjustment?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Carib Tings & More does hand-crafted memorabilia for the tourism industry, in which each batch of
items is a job. The company has a highly machine intensive production process, so it allocates
manufacturing overhead based on machine hours. Carib Tings & More pre-determined overhead
application rate for 2024 was computed from the following data:
Total estimated factory overheads $2,400,000
Total estimated machine hours
40,000
At the end of May 2024, Carib Tings & More reported work in process inventory of $176,000.
During June 2024, Carib Tings & More actually used 3,000 machine hours and recorded the
following transactions.
Purchased $324,000 worth of materials on account. Separately, Carib Tings &
More paid a $2,500 bill for freight in.
i)
ii)
Manufacturing wages incurred
$400,000
iii)
Materials requisitioned (includes $30,000 of indirect materials)
$420,000
iv) Assigned manufacturing wages, 85% direct labour, 15% indirect labour
v)
vi)
Depreciation expense on factory equipment used on the different jobs
Other manufacturing overhead incurred
$95,000
$35,000
vii)
Allocated manufacturing overhead for June 2024
viii)
Cost of jobs completed
ix)
Cost of jobs sold (on account) at a margin of 33%% on sales
$1,015,000
$985,000
Required:
(a) Compute Carib's predetermined manufacturing overhead rate for 2024.
(b) State the journal entries necessary to record the above transactions in the general journal. Assume
that Carib uses the perpetual inventory system.
(c) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account and state
the balance on the account before performing end of period closing entries. Show the journal
entries necessary to dispose of the variance.
(d) What is the balance in the Cost of Goods Sold account after the adjustment?
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