4-42    Journal Entries, Schedule of Cost of Goods Manufactured Apex Corporation manufactures eighteenth-century, classical-style furniture. It uses a job costing system that applies factory over- head on the basis of direct labor-hours. Budgeted factory overhead for the year 2010 was $1,235,475, and management budgeted 86,700 direct labor-hours. Apex had no materials, work-in-process, or finished goods inventory at the beginning of August 2010. These transactions were recorded during August:

a.      Purchased 5,000 square feet of oak on account at $25 per square foot.

b.     Purchased 50 gallons of glue on account at $36 per gallon (indirect material).

c.      Requisitioned 3,500 square feet of oak and 30.5 gallons of glue for production.

d.     Incurred and paid payroll costs of $187,900. Of this amount, $46,000 were indirect labor costs; direct labor personnel earned $22 per hour on average.

e.      Paid factory utility bill, $15,230 in cash.

f.      August’s insurance cost for the manufacturing property and equipment was $3,500. The premium had been paid in March.

g.      Incurred $8,200 depreciation on manufacturing equipment for August.

h.     Recorded $2,400 depreciation on an administrative asset.

i.       Paid advertising expenses in cash, $5,500.

j.       Incurred and paid other factory overhead costs, $13,500.

k.     Incurred miscellaneous selling and administrative expenses, $13,250.

l.       Applied factory overhead to production on the basis of direct labor-hours.

m.    Completed goods costing $146,000 manufactured during the month.

n.     Sales on account in August were $132,000. The cost of goods sold was $112,000.

 

Required

1.    Compute the firm’s predetermined factory overhead rate for the year.

2.    Prepare journal entries to record the August events. Letter your entries from a to n.

3.    Calculate the amount of overapplied or underapplied overhead to be closed to the Cost of Goods Sold account on August 31, 2010.

4.    Prepare a schedule of cost of goods manufactured and sold.

5.    Prepare the income statement for August.