Question: Sager Company manufactures variations of its
Sager Company manufactures variations of its product, a technopress, in response to custom orders from its customers. On May 1, the company had no inventories of goods in process or finished goods but held the following raw materials.
Material M . . . . . . . . 200 units @ $250 5 $50,000
Material R . . . . . . . . 95 units @ 180 5 17,100
Paint . . . . . . . . . . . . . 55 units @ 75 5 4,125
Total cost . . . . . . . . . $71,22
On May 4, the company began working on two technopresses: Job 102 for Worldwide Company and Job 103 for Reuben Company.
RequiredUsing Exhibit 2.2 as a guide,
Exhibit 2.2:
prepare job cost sheets for jobs 102 and 103.
Using Exhibit 2.4 as a guide,
prepare materials ledger cards for Material M, Material R, and paint. Enter the beginning raw materials inventory dollar amounts for each of these materials on their respective ledger cards. Then, follow the instructions in this list of activities.
a. Purchased raw materials on credit and recorded the following information from receiving reports and invoices.
Receiving Report No. 426, Material M, 250 units at $250 each.
Receiving Report No. 427, Material R, 90 units at $180 each.
Instructions: Record these purchases with a single journal entry. Enter the receiving report information on the materials ledger cards.
b. Requisitioned the following raw materials for production.
Requisition No. 35, for Job 102, 135 units of Material M.
Requisition No. 36, for Job 102, 72 units of Material R.
Requisition No. 37, for Job 103, 70 units of Material M.
Requisition No. 38, for Job 103, 38 units of Material R.
Requisition No. 39, for 15 units of paint.
Instructions: Enter amounts for direct materials requisitions on the materials ledger cards and the job cost sheets. Enter the indirect material amount on the materials ledger card. Do not record a journal entry at this time.
c. Received the following employee time tickets for work in May.
Time tickets Nos. 1 to 10 for direct labor on Job 102, $90,000.
Time tickets Nos. 11 to 30 for direct labor on Job 103, $65,000.
Time tickets Nos. 31 to 36 for equipment repairs, $19,250.
Instructions: Record direct labor from the time tickets on the job cost sheets. Do not record a journal entry at this time.
d. Paid cash for the following items during the month: factory payroll, $174,250, and miscellaneous overhead items, $102,000.
Instructions: Record these payments with journal entries.
e. Finished Job 102 and transferred it to the warehouse. The company assigns overhead to each job with a predetermined overhead rate equal to 80% of direct labor cost.
Instructions: Enter the allocated overhead on the cost sheet for Job 102, fill in the cost summary section of the cost sheet, and then mark the cost sheet “Finished.†Prepare a journal entry to record the job’s completion and its transfer to Finished Goods.
f. Delivered Job 102 and accepted the customer’s promise to pay $400,000 within 30 days.Instructions: Prepare journal entries to record the sale of Job 102 and the cost of goods sold.
g. Applied overhead to Job 103 based on the job’s direct labor to date.
Instructions: Enter overhead on the job cost sheet but do not make a journal entry at this time.h. Recorded the total direct and indirect materials costs as reported on all the requisitions for the month.
Instructions: Prepare a journal entry to record these costs.
i. Recorded the total direct and indirect labor costs as reported on all time tickets for the month.
Instructions: Prepare a journal entry to record these costs.
j. Recorded the total overhead costs applied to jobs.
Instructions: Prepare a journal entry to record the allocation of these overhead costs.k. Compute the balance in the Factory Overhead account as of the end of May.
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EXHIBIT 2.2 Accounting System: Exhibit 2-2 File Edit Maintain Road Warriors, Los Angeles, California Tasks Analysis Options Reports Window Help Job Cost Sheet JOB COST SHEET Customer's Name Carroll Connor Job No. В15 1542 High Point Dr. Malibu, California Address City & State Job Description Level 1 Alam Systom on Ford Expedition Date promised | March 15 March 3 Date completed March 11 Date started Direct Materials Direct Labor Overhead Requisition Time Ticke Date Cost Date Cost Date Rate Cost 3/3/2013 R-4698 100.00 3/3/201: L-3393 120.00 3/11/2013 160% of 1,600.00 3/7/2013 R4705 225.00 3/4/2013 L-3422 150.00 Direct Labor 3/9/2013 R4725 180.00 3/5/2013 L-3456 180.00 Cost 3/10/2013 R-4777 95.00 3/8/2013 L-3479 60.00 3/9/2013 L-3501 90.00 3/10/2013 L-3535 240.00 3/11/2013 L-3559 160.00 Total 600.00 Total 1,000.00 Total 1,600.00 REMARKS: Completed job on March 11, and shipped to customer on March 15. Met all specifications and requirements. SUMMARY: Materials 600.00 Labor 1,000.00 Overhead 1,600.00 Signed: C. Luther, Supervisor Total cost 3,200.00 EXHIBIT 2.4 MATERIALS LEDGER CARD OAD WO Road Warriors Materials Ledger Card Los Angeles, California Item Alarm system wiring Maximum quantity 5 units Stock No. Minimum quantity 1 unit Quantity to reorder M-347 Location in Storeroom Bin 137 2 units Received Issued Balance Receiving Report Requi- Unit Total sition Unit Total Unit Total Number Units Price Price Number Units Price Price Units Price Price 225.00 225.00 225.00 675.00 225.00 450.00 Date 1 3/4/2013 C-7117 2 225.00 450.00 3 3/7/2013 R-4705 1 225.00 225.00 2
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