calculate raw materials inventory value , Cost Accounting

Tony Allan Inc is a small manufacturer of metal products in Toronto.  The company rents its factory building.  It uses a job order costing system because it has a wide variety of products that receive varying attention and effort in the two factory departments, Machining and Assembly.  Tony Allen Company uses a perpetual inventory system.   Tony Allen Company had the following post-closing trial balance as of December 31, 2011:

101

Cash

$15,000

 

102

Accounts Receivable

       40,000

 

103

Raw Materials Inventory

?

 

104

Goods in Process Inventory

         4,000

 

105

Finished Goods Inventory

       20,000

 

106

Unexpired Insurance

       12,000

 

107

Office Equipment

       20,000

 

108

Accumulated amortization - Office Equipment

 

$5,000

109

Factory Equipment

     950,000

 

110

Accumulated Amortization - Factory Equipment

 

    220,000

201

Accounts Payable

 

      23,000

202

Wages and Salaries Payable

 

        1,000

203

Accrued Utilities

 

        2,000

204

Accrued Property Taxes

 

        3,000

301

Capital Stock

 

    100,000

302

Retained Earnings

 

?

 

 

?

?

Goods in process:

Job order

Dep't

Direct

Direct

Factory

Total

Number

 

Materials

Labour

Overhead

Cost

100

Machining

$1,800.00

$800.00

$900.00

$3,500.00

 

Assembly

$200.00

$200.00

$100.00

$500.00

 

 

 

 

 

$4,000.00

Finished goods:

Stock #

Reference

Quantity

Unit Cost

Total Cost

 

 

 

 

 

X-1

Job 98

   100.00

    80.00

$ 8,000.00

X-2

Job 99

1,000.00

    12.00

$12,000.00

 

 

 

 

$20,000.00

Raw materials:

Code

Quantity

Unit Cost

Total Cost

 

 

 

 

A

    4,000

?___(A)

?

B

  10,000

?___(B)

?

C

       400

?___(C)

?

Supplies

Various

 

$1,400.00

 

 

 

?

 Labour costs and overhead costs:

 The hourly rate including benefits for machinists is $_____(D) and for assemblers is $______(E).

To cost jobs as they are worked on, a predetermined or budgeted overhead rate was computed for 2009 based on the following budgeted cost drivers:

            Machining department                       69,450 machine hours

            Assembly department                         $206,400 of direct labour

These overhead rates will be used throughout the year by each department.  (Note that applying factory overhead on the basis of machine hours is not something you have done before in this course.) All overhead will be applied to all jobs worked on during the year in proportion to the machine-hour and/or direct-labour cost devoted to each job.

This budget was prepared after careful consideration of the sales outlook for the coming year.  The forecasted budget consisted of the following items:

For The Year Ended December 31, 2011

 

 

Machining

Assembly

Total

Variable costs:

 

 

 

 

Supplies

$14,400

$5,400

$19,800

 

Indirect Labour

22,800

16,800

39,600

 

Utilities

30,000

9,000

39,000

 

Repairs

24,000

6,000

30,000

 

Misc.

19,920

12,336

32,256

 

 

111,120

49,536

160,656

Fixed costs:

 

 

 

 

Insurance

7,200

2,400

9,600

 

Amortization

114,000

14,400

128,400

 

Rent

24,000

16,800

40,800

 

Property taxes

4,200

1,200

5,400

 

Supervision

17,280

18,864

36,144

 

 

166,680

53,664

220,344

Total Factory Overhead

$277,800

$103,200

$381,000

 

 

 

 

 

 

FOH rate = budgeted FOH

 

 

 

 

budgeted cost driver

 

 

 

 

 

 

 

 

TRANSACTIONS:

The following transactions occurred during the month of January 2012:

1.  Purchases of raw materials (on account):

 

 

 

 

Units

$$

Receiving report #

1012

A

5,000

 ?

Receiving report #

1013

B

6,000

 ?

Receiving report #

1014

A

2,500

 ?

Receiving report #

1015

B

5,000

 ?

Receiving report #

1016

C

2,125

 ?

Receiving report #

1017

B

3,000

 ?

Receiving report #

1018

Supplies

N/A

$3,000.00

2. Assume that costs have not changed in the last year.

3. Returns on account:  50 units of material B.  (receiving report #1019)

4. The direct material requisitions were summarized, and the following data were shown on a material usage report.

Machining Department  Direct Material Usage

For the Month Ended January 31, 2012

Requisition

Type

Job Order

Quantity

M89

B

101

1,500

M90

A

102

3,000

M91

A

103

1,000

M92

B

103

1,000

M93

B

102

3,000

M94

B

101

200

M95

A

104

2,000

Assembly Department Direct Material Usage

For the Month Ended January 31, 2012

Requisition

Type

Job Order

Quantity

A301

C

100

5

A302

C

103

200

A303

C

101

800

A304

C

102

1,500

A305

C

103

20

5. A summary of payroll costs incurred as per the time tickets is as follows:

Actual Labour Hours Worked  For the Month Ended January 31, 2012

Work

Job

 

 

Ticket

Order

Machining

Assembly

ML480

101

             4

 

ML481

101

          300

 

ML482

103

          200

 

ML483

102

          240

 

ML484

104

          100

 

ML485

103

            20

 

AL60

100

 

4

AL61

102

 

1,400

AL62

101

 

100

AL63

103

 

200

AL64

102

 

40

Total direct labour

          864

1,744

Other payroll costs:

 

 

Machining

Assembly

Total

Indirect labour

$2,000

$1,500

$3,500

Factory Supervision

$1,200

$1,600

$2,800

Selling and admin. Wages

 

 

$6,000

(Only factory wages should be run through the factory payroll account, whereas the rest should go directly to Selling and Admin.)

6. Apply overhead to jobs.  See data for item 6 to obtain machine hours worked.  (A direct labourer operates more than one machine simultaneously, so machine hours are not necessarily equal to labour hours incurred by machinists.)

7. Use the following information to (a) record the completion and  (b) the saleof the items:

Tony Allen Inc Production and Sales Data

For the Month Ended January 31, 2012

Job #

Finished

Date

Mach

Stock

Invoice

Sold

Sales

 

Units

Finished

Hours 

Number

Number

 Units

Revenue

 

 

 

 

 

 

 

 

 

98

  100

Dec. 11/09

n/a

X-1

#923

   100

$  9,300

 

99

1000

Dec. 15/09

n/a

X-2

#924

1,000

26,000

 

100

50

Jan. 5/10

0

X-3

#925

20

1,800

 

101

1750

Jan. 12/10

3,000

X-4

#926

900

24,400

 

102

1000

Jan. 19/10

2,000

X-5

#927

950

75,000

 

103

100

Jan. 30/10

150

X-6

#928

50

6,500

 

104

Unfinished

800

 

 

 

 

 

 

 

 

5,950

 

 

 

$143,000

 

All sales are on account.

8. Gross payroll (factory and office) of $44,000 is paid in cash.

9. The following additional overhead costs were incurred during January:

 

 

 

 

Selling

 

 

 

Item

Total

Machining

Assembly

& Admin.

 

Account to Credit

Supplies requisitioned

$2,000

$1,500

$400

$100

 

?

 

Utilities

4,000

2,700

800

500

 

Accrued utilities

Repairs by outsiders

3,000

2,350

600

50

 

A/P

 

Miscellaneous

3,000

2,000

900

100

 

A/P

 

Insurance

1,000

600

200

200

 

?

 

Amortization on equip.

11,000

9,500

1,200

300

 

?

 

Rent

4,000

2,000

1,400

600

 

A/P

 

Property taxes

500

350

100

50

 

Accr.prop. Taxes

 

$28,500

$21,000

$5,600

$1,900

 

 

 

10. Utility bills received $2,900 (DR Accrued utilities and CR A/P).

11. Utility bills paid, $2,525.

12. Other selling and administrative expenses incurred, $15,000.

13. Other payments on account, $63,500.

14.  Collections on account, $99,000.

15. Close under- or over-applied Factory Overhead to Cost of Goods Sold.

REQUIRED:


1. Enter all starting balances in the GL and sub ledgers. You will need to calculate your raw materials inventory value (about $30,000) based on your assigned variables. Adjust retained earnings to balance the opening trial balance. Round all totals to the nearest dollar and all per unit numbers to two decimal places.
2. Journalize the above summary transactions, all dated January 31, 2012.(No new balance sheet accounts are required.You should need to add only the following temporary accounts: Revenue, Cost of Goods Sold, Selling & Administrative Expense, Factory Overhead, Factory Payroll.)
3. Post to the general ledger and sub ledgers for January 2010, using proper posting references. (It is recommended that you post as you go, especially for accounts that have sub ledgers.)
4. Prepare a trial balance as of January 31, 2012.
5. Prepare schedules that reconcile the raw materials, goods in process and finished goods sub ledgers with the general ledger accounts as of January 31, 2012.
6.  Prepare a manufacturing statement for January 2012.
7. Prepare an income statement and statement of retained earnings for January 2012.
8. Prepare a (classified) balance sheet as of January 31, 2012.
9. Prepare and post a closing entry (or entries) for the month end.
10. Order your submission as follows:

  • §  Cover sheet with group members and your variables.
  • §  Journal entries
  • §  General ledger
  • §  Sub ledgers
  • §  Trial balance
  • §  Account reconciliations
Posted Date: 2/19/2013 2:07:32 AM | Location : United States







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