Good morning, can you please help me with assignment as follows (kindly show breakdown of calculations so I can understand to learn, thank you):

 

The decision was made to use a process costing system. The first month of operation went fairly smoothly, and the CFO is ready to prepare her journal entries but asked for

your help because she has not done this before for a manufacturing company.

 

Data for month ending 1/31/200X

Direct labor expended on jobs completed in month 1 $100,000

Direct material used up $500,000

Budgeted manufacturing overhead $2,000,000

Budgeted production volume 4,000 units

Actual production volume 4,500 units

Supplies, indirect labor, maintenance repair costs totaled $2,200,000

Beginning work in process inventory 0

Ending work in process inventory 0

 

Part 1:

Using the data in the chart, journalize entries including a date and notes showing calculations to record the following:

Labor

Direct material going into the work in progress (WIP) account

Manufacturing overhead all being credited to accounts payable.

 

Part 2:

A memo is needed summarizing the data from the first month of using the process costing system

operation. Using the data above, address these questions and show calculations:

 

Why is calculating the predetermined overhead rate so important?

Compute the firm's predetermined overhead rate.

What would it mean if you mistakenly used too high a predetermined rate? What would it mean if you mistakenly used too low a predetermined rate?

Compute the proper amount of overhead to apply.

Compute the over or under applied overhead.

Journalize entries closing out of the balance in manufacturing overhead to the appropriate accounts, and show calculations in the

notes of the journal entry.

SuperTutor

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Status NEW Posted 11 Jul 2017 07:07 AM My Price 15.00

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