Reference no: EM132536307

Freezing Winter Products Ltd. (FWPL) operates a job-order cost system and allocates overhead costs to jobs on the basis of direct labour cost. The company estimated manufacturing overhead cost in the amount of $258,400 and direct manufacturing labour cost of $152,000 for the year. FWPL's inventory accounts at the beginning and end of year were as follows:

                                   Janauary 1 ( beginning of year )                December 31 (end of year)

Raw Materials                               38,000                                          28,000

Work in process                             84,000                                           76,000

Finished Goods                               132,000                                            116,000

The following actual costs were incurred during the year:

Purchase of raw materials (all direct) ............. $254,000

Direct manufacturing labour cost ..................... 156,000

Manufacturing overhead costs:

Insurance ........................................................... 22,000

Amortization of equipment ................................ 28,000

Indirect labour .................................................... 92,000

Property taxes .................................................... 12,000

Maintenance ....................................................... 27,000

Rent, building .................................................... 84,000

Question 1. a. Compute the predetermined overhead rate for the year.

b. Compute the amount of under-or over allocated overhead for the year and prepare the journal entry to write it off to cost of goods sold.

Question 2. Prepare journal entries for transactions affecting the Work in Process account for the year

Question 3. Compute the cost of goods sold for the year. (Do not include any under - or over allocated overhead in your cost of goods sold figure.)

Question 4. Job 222 was started and completed during the year. What price would have been charged to the customer if the job required $4,500 in direct materials and $5,800 in direct manufacturing labour cost, and the company priced its job at 30% above cost to manufacture?

Question ?5. Direct labour made up $16,800 of the $76,000 ending Work in Process inventory balance. Of the remaining balance of $59,200, how much was direct materials and how much was manufacturing overhead?