Balance Sheet and Factory Overhead

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Chrome-It, Inc., manufactures special chromed parts made to the order and specifications of the customer. It has two production departments, stamping and plating, and two service departments, power and maintenance. In any production department, the job in process is wholly completed before the next job is started. The company operates on a fiscal year, which ends September 30. Following is the post-closing trial balance as of September 30: [pic]

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Additional information:
1. The balance of the materials account represents the following: [pic]
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The company uses the FIFO method of accounting for all inventories. Material A is used in the stamping department, and materials B and C are used in the plating department. 2. The balance of the work in process account represents the following costs that are applicable to Job 905. (The customer’s order is for 1,000 units of the finished product.) Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,500 Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 $3,600 3. The finished goods account reflects the cost of Job 803, which was finished at the end of the preceding month and is awaiting delivery orders from the customer. 4. At the beginning of the year, factory overhead application rates were based on the following data: [pic]

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In October, the following transactions were recorded: a. Purchased the following materials and supplies on account: Material A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100 units@$26 Material B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 units@$17 Material C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 units@$28 Factory Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,200 b. The following materials were issued to the factory:

[pic]
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Customers’ orders covered by Jobs 1001 and 1002 are for 1,000 and 500 units of finished product, respectively. c. Factory wages and office, sales, and administrative salaries are paid at the end of each month. The following data, provided from an analysis of labor-time records and salary schedules, will be sufficient for the preparation of the entries to record the payroll. (Assume FICA and federal income tax rates of 8% and 10%, respectively.) Record the company’s liability for state and federal unemployment taxes. (Assume rates of 4% and 1%, respectively.) Record the payroll distribution for the month of October. [pic]

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Wages of the supervisors, custodial personnel, etc., totaled $9,500; administrative salaries were $18,300. d. Miscellaneous factory overhead incurred during October totaled $4,230. Miscellaneous selling and administrative expenses were $1,500. These items as well as the FICA tax and federal income tax withheld for September were paid. (See account balances on the post-closing trial balance for September 30.) e. Annual depreciation on plant assets is calculated using the following rates: Factory buildings—5%

Machinery and equipment—20%
Office equipment—20%
f. The balance of the prepaid insurance account represents a three-year premium for a fire insurance policy covering the factory building and machinery. It was paid on the last day of the preceding month and became effective on October 1. g. The summary of factory overhead prepared from the factory overhead ledger is reproduced here: [pic]

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h. The total expenses of the maintenance department are distributed on the basis of floor space occupied by the power department (8,820 sq ft), stamping department (19,500 sq ft), and plating department (7,875 sq...
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